U.S. MARKET AVERAGES

Stocks opened higher on oil prices decline and healthy U.S. economic data, but later in the session lost momentum and traded in a lackluster fashion throughout most of the morning session. The choppy trading resulted largely from the fact that Friday marks the expiration of key options and futures which tend to create volatility and exaggerate stock price movements.

In economic news, the U.S. Commerce Department reported that the current account deficit narrowed in the third quarter to $195.8 billion, compared to the second-quarter revised $197.8 billion. Economists had expected the deficit to widen to more than $200 billion.

In morning trading, the Dow Jones industrial average rose 49.31, or 0.45%. The Standard & Poor''s 500 index rose 3.00, or 0.24%, and the Nasdaq composite index fell 1.35, or 0.06%.

Bonds prices rose, with the yield on the 10-year Treasury note falling to 4.44% from 4.47% late Wednesday.

The airline sector advanced steadily in early going to rise by 1.8%. The pharmaceutical sector began a rally Monday after Pfizer (PFE: chart) announced an increase in its quarterly dividend. On Friday the sector continued its movement to the upside to reach a gain of just under 1%.

Financial stocks shrugged off a lowered profit forecast that First Data Corp issued, as banking, insurance and brokerage stocks followed the market higher on Friday.

Energy stocks remained notable movers to the downside. The biotech group posted modest losses. The retail sector also traded slightly below the flat line.

Among the biggest gainers of the day, Adobe (ADBE: chart) jumped to a new 52-week high after its earnings release sparked an advance of nearly 10%. Qwest (Q: chart) extended advance to set a new high. AMR (AMR: chart) is expanding its peak, followed by fellow airline Continental (CAL: chart) which also hit a fresh high.

Among decliners, MGI Pharma (MOGN: chart) extended its 52-week low. Falling on disappointing quarterly results, Scholastic (SCHL: chart) broke below a 2-month trading range to reach a new low.


MOVERS AND SHAKERS

SMSC Corp (SMSC: chart) posted Q3 earnings of $5.4 million, or 24 cents a share, up from $600,000, or 3 cents a share, the year earlier. Excluding special charges, the company would have earned 38 cents a share against 4 cents a year ago. Revenue climbed to $86.6 million from $50.8 million. The average estimates of analysts were 33 cents a share on revenue of $83 million. The stock dropped 11%.

Oracle Corp (ORCL: chart), database software company, posted quarterly earnings decline of 2% as the company reported an increase in sales but felt the effects of adverse currency-exchange rages and higher expenses following a number of acquisitions. The stock dropped 4%.

Scholastic Corp (SCHL: chart) forecast fiscal 2005 earnings at the bottom end of its $2.30 to $2.50 a share range after reporting an 8% decline in Q2 profit. Scholastic''s net income in the Q2 fell to $66.9 million, or $1.59 a share, with revenue up 2% at $696 million mainly due to a decline on its international operations. It sees full-year revenue between $2.3 billion and $2.4 billion. Analysts were expecting earnings of $1.80 a share for the Nov. 30-ending quarter and $2.43 for the fiscal year. Company’s shares fell 2.1%.

Quiksilver Inc (ZQK: chart), sports apparel and accessories company, reported Q4 profit rise of $33.6 million, or 27 cents a share, from $24.9 million, or 20 cents, a year ago, matching analyst estimates. Revenue for the quarter advanced to $637.4 million from $350.3 million. The stock rose 3%.

ECONOMIC NEWS

Friday morning, the Department of Commerce released its report on the current account deficit in the third quarter, showing that the deficit unexpectedly narrowed from the second quarter.

The report showed that the current account deficit narrowed to $195.8 billion in the third quarter from an upwardly revised $197.8 billion in the second quarter. Economists had expected the deficit to widen to about $206 billion.

The Commerce Dept. said that the narrower deficit reflected a decrease in net outflows for unilateral current transfers, a shift to a surplus on income from a deficit, and an increase in the surplus on services.