Stocks rise Friday on retailers' earnings news; Dow up 2.5% for the week

Encouraging earnings news from major retailers and The Walt Disney Co. drew investors back into the stock market one day after a big drop. The Dow Jones industrial average gained 73 Friday after dropping 94 on Thursday. Positive quarterly reports Friday from Abercrombie & Fitch Co., J.C. Penney Co. and Disney offset worries about a disappointing consumer confidence report and an increase in the nation's trade deficit that was bigger than forecast. Disney said late Thursday that higher revenue at its cable, broadcast and movie studio units helped produce an 18 percent increase in its fiscal fourth-quarter profit. Abercrombie's results were better than expected, while J.C. Penney raised its profit and sales forecasts. The market briefly stumbled after a report that consumer confidence fell. The preliminary Reuters/University of Michigan consumer sentiment index for November came in at 66.0, down from 70.6 in October. That made investors nervous that cautious consumers wouldn't step up spending at the holidays. The reports from retailers also helped ease concerns about an 18.2 percent increase in the trade deficit in September. The $36.5 billion deficit was the largest since January and more than the $31.7 billion imbalance economists had expected. The wider deficit was driven by a big rise in imports, led by a jump in oil shipments. That overwhelmed a fifth consecutive increase in exports. Exports are expected to continue to rise as the dollar weakens, which makes U.S. exports less expensive to overseas buyers. Stocks pared their gains as the dollar pulled off its lows of the day. The dollar's steady decline since March, due largely to record-low U.S. interest rates, has encouraged investors to move money out of dollars and into higher-yielding assets like stocks and commodities. Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors, said investors were able to look past the consumer confidence figure and instead focused on earnings reports from retailers because they are a more reliable indicator about the economy. "It's probably safe to say that investors are rationally more focused on what consumers do rather than what they say," he said. According to preliminary calculations, the Dow rose 73.00, or 0.7 percent, to 10,270.47. The Dow's drop Thursday broke a six-day winning streak, as oil prices tumbled on fresh signs of weak energy demand and a stronger dollar. The broader Standard & Poor's 500 index rose 6.24, or 0.6 percent, to 1,093.48. The Nasdaq composite index rose 18.86, or 0.9 percent, to 2,167.88. For the week, the Dow rose 2.5 percent, after jumping 3.2 percent last week. The two weeks have boosted the Dow's gain for the year to 17 percent. The S&P 500 index is up 2.3 percent for the week, while the Nasdaq is up 2.6 percent.