* China, German trade data signal growth in demand
* Narrower U.S. trade deficit should boost GDP
* Shares of LinkedIn surge after earnings, outlook
* Indexes up: Dow 0.3 pct, S&P 0.4 pct, Nasdaq 0.8 pct
By Angela Moon
NEW YORK, Feb 8 (Reuters) - U.S. stocks edged higher on
Friday, with the benchmark S&P index hitting a five-year high
after a batch of positive economic reports, but gains were
capped as investors grew cautious about a further advance.
Data showing stronger international trade from China and
Germany and a report showing a smaller U.S. trade deficit in
December were seen as encouraging signs of global demand.
Among stocks on the rise, the technology sector was boosted
by gains in LinkedIn Corp and AOL Inc following
their quarterly results.
The S&P 500, up 6.3 percent for the year, is on track
for six straight weeks of gains. But the index has found it
tougher to climb in recent days as investors await strong
trading incentives to drive it further upward.
"We are going to have this churn and this consolidation,
which actually isn't a bad thing," said Ken Polcari, director of
the NYSE floor division at O'Neil Securities in New York.
The market is building a base by consolidating and showing
less volatility, he said.
"If it builds a base, from there it is easier to make the
argument that you move ahead," Polcari said.
The Dow Jones industrial average was up 34.83 points,
or 0.25 percent, at 13,978.88. The Standard & Poor's 500 Index
was up 6.06 points, or 0.40 percent, at 1,515.45. The
Nasdaq Composite Index was up 25.90 points, or 0.82
percent, at 3,191.04.
The CBOE Volatility index, Wall Street's so-called
fear gauge, was down 4.2 percent at 12.94. The gauge generally
moves inversely to the S&P 500.
Still, there were concerns whether the market would stride
"I'm watching the 14 level closely. The break below it at
the beginning of the year signaled the sharp rally in January,
and a rally back above it could be a sign to exercise some
caution," said Bryan Sapp, senior trading analyst at Schaeffer's
Healthcare stocks also performed well. The Morgan Stanley
healthcare payor index was up 2.3 percent. Molina
Healthcare Inc surged 9.7 percent to $31.67 as the
biggest boost to the index after posting fourth-quarter
McDonald's Corp said January sales at established
hamburger restaurants around the world fell 1.9 percent, a
steeper decline than analysts had expected. Still, shares edged
up 0.7 percent to $95.31.
Data showed Chinese exports grew more than expected in
January, while imports climbed 28.8 percent, highlighting robust
domestic demand, while German data showed a 2012 surplus that
was the nation's second highest in more than 60 years, an
indication of the underlying strength of Europe's biggest
Another positive sign was U.S. economic data which showed
the trade deficit shrank in December to $38.5 billion, its
narrowest in nearly three years, indicating the economy did much
better in the fourth quarter than initially estimated.
Shares of LinkedIn jumped 18.8 percent to $147.40 after
announcing quarterly profits and giving a bullish forecast for
AOL Inc shares also jumped 7 percent to $33.60 after
the online company said its quarterly profit had jumped, boosted
by a 13 percent rise in advertising sales.
According to Thomson Reuters data through Friday morning, of
339 companies in the S&P 500 that have reported earnings, 69.9
percent have exceeded analysts' expectations, above a 62 percent
average since 1994 and 65 percent over the past four quarters.
Fourth-quarter earnings for S&P 500 companies grew 5.2
percent, according to the data, above a 1.9 percent forecast at
the start of the earnings season.