Wall St rallies on good US trade stats

It's been some time since there was any good news about the US economy but that's exactly what investors got with the latest trade data.

The US exported far more than expected, and imported less oil and goods from Japan, taking the trade deficit to its lowest since December.

Stocks rallied on Wall Street on renewed hopes for growth in the world's largest economy.

The trade data has led Morgan Stanley to raise its estimates for US second-quarter growth to an annual rate of 3.1 per cent from 2.7 per cent. Growth slowed to a 1.8 per cent pace in the first quarter.

"A lot of forecasters, ourselves included, had lowered expectations for the second quarter, and this will reverse some of that reduction in expectations," David Resler, chief US economist at Nomura Securities International in New York, told Reuters.

The data showed that exports from the US rose 1.3 per cent to an all-time high of US$175.6 billion. Part of the rise is linked to the depreciation of the greenback.

Separately, imports to the US declined by 0.4 per cent to US$219.2 billion, as lower Japanese and oil shipments offset record imports of foods, feeds and beverages.

Today's rally in stocks came after six days of losses took the S&P 500 near its 200-day moving average. The index yesterday closed at 1,279.56, about 2 per cent above that average.

"That's a very significant level," Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, told Bloomberg. "That's where we expect some buyers to step in to defend the longer-term trend."

In late trading, the S&P 500 was up 1.1 per cent at 1,293.80. The Dow Jones industrial average was up 1.03 per cent and the Nasdaq composite was up 0.7 per cent.

The trade data may be the catalyst to break the slide of recent weeks, and to help ease investors' concerns, but the bears won't be so easily dislodged.

Housing guru Robert Shiller says that the weak US labour market may foreshadow further tough times. "Whether we call it a double-dip or not, I think there is a risk," Shiller told Reuters Insider in an interview.

Risks though are nothing new. The housing market has been a negative for several years and appears likely to remain so for more to follow.

The latest trade data however points to the potential for another solid earnings season, when Corporate America reports second-quarter results next month.

"People have been focusing on the negatives and have not been emphasising the earnings momentum," John Carey, a Boston-based money manager at Pioneer Investments, which oversees about US$250 billion, told Bloomberg. "Some stocks present good values again. It's a good environment for investors to be positioning themselves."

Made in America is the new normal for better or worse.