Stocks Climb for Fifth Straight Day

The current-account deficit for the first quarter rose to $195.1 billion, a record.
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Updated from 4:11 p.m. EDT

Blue chips were stronger and tech stocks ticked up Friday as the major averages posted a fifth straight day of gains, even as oil closed at a record high.

The

Dow Jones Industrial Average

rose 44.42 points, or 0.42%, to 10,623.07, helped by

Caterpillar's

(CAT) - Get Report

1.9% gain.

The

S&P 500

was up 6 points, or 0.5%, to 1216.96, pushing the index into positive territory for the year, while the

Nasdaq Composite

was higher by 0.96 points, or 0.05%, to 2090.11. The 10-year Treasury was down 1/32 in price to yield 4.08%, while the dollar was weaker against the yen and the euro.

Trading volume on the

New York Stock Exchange

was 2.36 billion shares, with advancers beating decliners by a 5-to-3 margin. Volume on the Nasdaq was 2 billion shares, with advancers matching decliners.

"The important thing most people have missed is that the advance/decline ratio is at a new recovery high, a good internal sign," says Al Goldman, chief market strategist with A.G. Edwards. "We've done this in the face of oil going up. We're feeling better about the economy. I still think the market will work higher, because the economy is still in good shape."

For the week, the Dow rose 1.05%, the S&P 500 was higher by 1.57%, and the Nasdaq gained 1.31%.

Oil futures spiked to record highs Friday in Nymex trading. The July crude contract finished $1.89 higher at $58.47 a barrel. Oil also touched a new intraday record of $58.60.

On the economic front, the University of Michigan's preliminary consumer sentiment index for June came in at 94.8, a five-month high. The reading came in above both economists' expectations of 89.0 and the final May reading of 86.9.

"This is the biggest monthly increase since April 2003, after the fall of Baghdad," says Ian Shepherdson, chief economist with High Frequency Economics. "If the gain in expectations can be maintained, it will signal significantly firmer core retail sales through the summer, but we are a bit nervous that the rebound in oil prices in the past couple of weeks will lift retail gas prices, dampening sentiment."

Elsewhere, the Commerce Department reported that the current-account deficit for the first quarter ballooned to $195.1 billion. Economists had expected a widening to $190.0 billion from about $188 billion in the fourth quarter.

Stronger sectors Friday included energy, homebuilding, materials and health care. Airlines and software were among the weaker areas.

In earnings news,

Circuit City

(CC) - Get Report

posted a wider-than-expected loss Friday, blaming higher expenses. The electronics retailer reported a first-quarter loss of $13.1 million, or 7 cents a share, compared with a loss of $5.2 million, or 3 cents a share, a year earlier. Sales rose 6.4% in the latest three months to $2.23 billion. Analysts expected Circuit City to post a loss of 2 cents a share on sales of $2.2 billion, according to Thomson First Call. The stock fell 72 cents, or 4.1%, to $16.93.

In corporate news, a New York state jury convicted former

Tyco

(TYC)

chief Dennis Kozlowski and former finance chief Mark Swartz of looting the conglomerate of hundreds of millions of dollars. Both were convicted on multiple counts, including grand larceny, which carries a sentence of up to 25 years in jail. The guilty verdict came in the former executives' second trial, after last year's mistrial. Tyco finished the session up 9 cents, or 0.3%, to $31.

Morgan Stanley

(MWD)

is reviewing its plan to spin off the company's Discover card business, according to a report in

The Wall Street Journal

. In April, the company said it would spin off the credit card unit. The stock was off 52 cents, or 1%, to close at $51.38.

Guidant

(GDT)

said two reported deaths have been linked to the company's heart defibrillators, and 45 other cases in which a device malfunctioned. Guidant's shares fell $1.20, or 1.6%, to $72.46.

After the bell Thursday,

Adobe Systems

(ADBE) - Get Report

reported a second-quarter profit of $149.8 million, or 29 cents a share, compared with $109.4 million, or 22 cents a share, a year ago. Quarterly revenue increased 21% to $496 million. Excluding items, the software company earned $142.9 million, or 28 cents a share. The Thomson First Call average consensus called for EPS of 27 cents on revenue of $491.7 million. Adobe, however, disclosed a shareholder lawsuit regarding its proposed acquisition of

Macromedia

(MACR)

. Adobe was down $1.07, or 3.3%, to finish at $31.34.

Also late Thursday,

KB Home

(KBH) - Get Report

reported second-quarter earnings of $181.5 million, or $2.06 a share, compared with $102.1 million, or $1.20 a share, a year ago. The consensus was for earnings of $1.78 a share. The homebuilder said revenue rose to $2.1 billion from $1.6 billion last year. KB Home also raised its earnings outlook for 2005. The stock rose $5, or 6.9%, to $77.25.

Brokerage Smith Barney lifted its ratings on KB Home as well as others in the homebuilding sector. The firm raised

Hovnanian

(HOV) - Get Report

,

Meritage Homes

(MTH) - Get Report

,

Beazer Homes

(BZH) - Get Report

,

Pulte

(PHM) - Get Report

and

Ryland

(RYL)

to buy from hold on the belief that the homebuilding group will benefit from a renewed wave of upward earnings revisions.

In other ratings news, Wachovia Securities downgraded shares of

Goldman Sachs

(GS) - Get Report

to market perform from outperform, citing earnings volatility. On Thursday, the investment bank reported second-quarter earnings of $1.71 a share, falling short of analysts' expectations of $1.87 a share.

UBS, however, raised its 2006 earnings estimate for Goldman Sachs, on the basis of positive remarks about the company's investment-banking pipeline. UBS now expects 2006 earnings to be $9.40 a share, up from $9.20 a share. The firm also reiterated its 2005 estimate of $9.35 a share. Goldman Sachs gained $1.15, or 1.1%, to $103.80.

Piper Jaffray cut

Archipelago

(AX) - Get Report

to underperform from market perform, saying shares have risen too fast after the company's announced merger plans with the

New York Stock Exchange

. In April, the NYSE announced the deal to acquire Archipelago, ending the Big Board's 212-year history as a privately owned institution. Archipelago lost 77 cents, or 1.9%, to $39.53.

Overseas markets were higher, with London's FTSE 100 up 0.6% to 5077 and Germany's Xetra DAX adding 0.5% to 4604. In Asia, Japan's Nikkei rose 0.9% at 11,514, while Hong Kong's Hang Seng was 0.6% higher at 13,912.

To view Aaron Task's video take on today's market, click here

.