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Market Update : 
Trade Deficit Soars to$66b
Author: Elena Todorova
Last Update: 11:46 AM EST November 10 2005


U.S. stocks started trading in a lackluster fashion as investors digested a record trade deficit of $66.1 billion in September and a new spike in unemployment filings. Investors were trying to decide whether the surging 11.2% trade deficit was an anomaly caused by higher oil imports after the devastating hurricanes or a sign of increasing trade imbalance.

Following three consecutive sessions of scarce economic data, today’s session will be one of heavy economic news load. The U.S. Commerce Department revealed that the nation''s trade deficit widened to a record $66.11 billion in September, compared to a revised $59.35 billion recorded for August. Economists had expected a more moderate widening.

Another economic report released by the U.S. Department of Labor revealed that initial jobless claims came in at 326,000 for the week ended November 5, an advance of 2,000 from the previous week''s revised total. Economists had expected a level of around 320,000.

The lackluster trading was helped by disappointing revenue included in Cisco''s (CSCO) quarterly results, weighing on technology stocks. The Dow was dragged by GM (GM), which is likely to decline sharply on news of a restatement of its 2001 results.

Energy stocks have continued their decline on crude oil prices falling below $58. The oil service space is now down about 3.1%. The oil and natural gas sectors are each showing losses of more than 2.8%.

Technology sector stands out as another notable decliner. The disk drive sector is currently down 1.5%, dragged by SanDisk (SNDK), down by 3.2%. The networking segment is falling 1.3% as Cisco (CSCO) drops 3.3% on its quarterly results.

The airline space has ticked above a recent trading range with a gain of 1.5%, boosted by falling oil.. The sector is now at its highest level since August.

iRobot (IRBT) is one of the best performers with a gain of 25%, two days after going a public. Following an IPO priced at $24 per share, the stock advanced immediately after it opened for trading in the mid-morning on Wednesday.

In the first hour of trading, the Dow Jones industrial average rose 0.32, or 0%. The Standard & Poor''s 500 index fell 0.84, or 0.07%, and the Nasdaq composite index fell 2.25, or 0.1%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.63% from 4.65% late Wednesday.


The auto maker General Motors (GM) announced it will review its earnings for 2001 due to an accounting error led it to overstate its 2001 profit by up to $400 million. Yesterday the company’s stock was under pressure after Deutsche Bank warned that the company would be negatively impacted if auto parts maker Delphi suffers a strike. General Motors’ stock dropped 3.8%.

Cisco Systems (CSCO) said yesterday its first-quarter earnings decreased as the company spent stock options for the first time, but profit excluding those costs rose 8%. The company’s stock lost 2.8%.


The U.S. trade deficit widened to a record high in September, according to a report from the Department of Commerce, with higher oil prices contributing to an increase in the value of imports.

The report showed that the trade deficit widened to a record high of $66.1 billion in September from a revised $59.3 billion in August. Economists had been expecting a more modest increase to $62.0 billion in September from the $59.0 billion originally reported for August.

The increase in the trade deficit came as the value of imports rose while the value of exports fell, with the rise in the value of imports partly due to higher oil prices.

The report showed that imports rose 2.4 percent to $171.3 billion in September from $167.3 billion in August, while exports fell 2.6 percent to $105.2 billion in September from $108.0 billion in August.

The number of people filing for first-time unemployment benefits ticked up in the most recent week and came in a little above economists' expectation.

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Sources: Data collected by and from company press releases, filings and corporate websites.
Market data: BATS Exchange. Inc.

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