Stocks end higher, add to week's big gains

NEW YORK - A day after home mortgage rates stayed below 5 percent for the second straight week, stocks held on to the week's big gains Friday after the government issued a mixed trade report.

The Commerce Department said the trade deficit declined 3.5 percent to $30.7 billion in August, as imports fell on lower oil demand. Economists expected the deficit to rise to $33 billion, or 3.3 percent from July's level, which was the highest in six months.

Exports of goods and services edged up 0.2 percent, an encouraging sign that the global economy is strengthening. But the decline in imports shows that domestic consumption is still weak.

The average rate on a 30-year fixed mortgage was 4.87 percent, down from 4.94 percent last week, Freddie Mac said. The last time rates for 30-year home loans were lower was the week ending May 21, when they averaged 4.82 percent.

This week's average rate for 30-year mortgages remained above the record low of 4.78 percent established in the spring. Last year at this time, the 30-year fixed-rate mortgage averaged 5.94 percent.

Low rates make home buying or refinancing more attractive for consumers. Case in point: refinance applications climbed 18 percent from last week, the Mortgage Bankers Association said.

Investors were also keeping a close watch on the dollar Friday, which recovered some of its recent losses after Federal Reserve Chairman Ben Bernanke reassured markets that the U.S. central bank will be able to wind down in its extraordinary stimulus measures when the time is right. His comments Thursday night calmed some of investors' fears about inflation, which can be triggered by a falling dollar. The rebound in the greenback weighed on oil, gold and other commodities.

The market's seven-month rally was put firmly back on track this week after two down weeks. Going into Friday, the Dow is up 300 points, or 3.2 percent, for the week. S&P 500 index is up 3.9 percent.

In early trading, the Dow Jones industrial average rose 9.90, or 0.1 percent, to 9,796.77. The Standard & Poor's 500 index added 0.64, or 0.1 percent, to 1,066.12, while the Nasdaq composite index rose 3.76, or 0.2 percent, to 2,127.69.