Stocks End Slightly Higher

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Third-quarter GDP growth was revised up to 4.9% from the 3.9% rate in the preliminary report. As expected, the bulk of the increase came from inventories, which were adjusted to a net gain of $27.1 billion from $9.9 billion, and net exports, which were revised to a net add of $40.5 billion from $27.7 billion. Consumption was lowered to 2.7% from 3.0% and government spending was revised to a gain of 3.9% from 3.7%. The GDP price index was raised to a 0.9% gain from 0.8%, while PCE-core inflator remained at a 1.8% gain.

Action Economics said it continues to expect GDP growth of 1.7% in the fourth quarter. The White House said on Thursday that it now sees real GDP growth of 2.7% for both 2007 and 2008.

New home sales rose 1.7% to an annualized rate of 728,000 in October but fell far short of the 750,000 rate that was anticipated. Making the report that much gloomier was the big downward revision in September to an annualized rate of 716,000 from the initial 770,000 rate and the adjustment in August's pace to 717,000 from 735,000. Gains during October were seen in three of the four regions, with only the West showing a decline. At the October selling pace, the supply of homes fell to 8.5 from a revised 9.0 months. The median selling price dropped 13% to $217,800 from a year ago.

This week's economic data, from durable goods orders to existing home sales to the Fed Beige Book, which surveyed October to mid-November, are pointing to significant economic slowing. In the logic of Wall Street, weaker data can be construed as positive for stocks, as signs of softness are expected to further convince the Fed of the need for rate cuts.

Oil prices soared by more than $4 to over $95 per barrel in overnight trading after an explosion at Enbridge's major Canada-to-U.S. export pipeline in Minnesota. January NYMEX crude was trading 45 cents higher at $91.07 per barrel on Thursday after two of the four pipelines that were shut down had been reopened. A third pipeline was expected to be back up by the end of the day and service on the fourth, which had been closed for maintenance before the explosion, is expected to be restored within two to three days. The U.S. said it was prepared to release oil from the Strategic Petroleum Reserve if supply was needed.

Among the stocks in the news Thursday, E*Trade Financial (ETFC) fell 8.7% despite news that it's getting a $2.55 billion cash infusion from hedge fund Citadel Investment. The discount brokerage will take a $2.2 billion charge as a result of selling its 3.0 billion asset-backed securities portfolio for $800 million to Citadel, whose purchase also includes $1.75 billion in 10-year bonds paying an annual interest rate of 12.5%. Mitch Caplan will step down as E*Trade's CEO and President Jarrett Lilien will serve as acting CEO until a new CEO is found.

Sears Holdings Corp. (SHLD) shares fell 10.5% after posting third-quarter earnings of one cent a share -- far below analyst's forecast of 50 cents a share -- vs. $1.27 (including 42 cents in gains) a year ago on a 4.2% drop in Sears Domestic's same-store sales, a 5.0% drop in Kmart's same-store sales and a 3.3% dip in total revenue. The retailer noted a $223 million decline in gross margin, reflecting both sales declines and an overall decline in its gross margin rate for the third quarter.

Cato Corp. (CTR) shares dropped 24.3% on a profit report of nine cents a share in the third quarter, down from 18 cents a share a year ago on a 5% drop in same-store sales and a total sales decline of 3.2%. The women's fashion specialty retailer expects to see breakeven to a net loss of eight cents a share for the fourth quarter, vs. net income of 40 cents in the prior-year period due to lower sales and additional markdowns. Cato's outlook for fiscal 2008 is earnings of 99 cents to $1.07 a share.

Regeneron Pharmaceuticals (REGN) shares shot up 23.1% on news that it has entered into a strategic collaboration agreement with Sanofi-Aventis SA (SNY) to discover, develop, and commercialize fully-human therapeutic antibodies utilizing Regeneron's proprietary VelociSuite of technologies (including VelocImmune). Sanofi-Aventis will also increase its ownership of Regeneron from about 4% to roughly 19% after buying 12 million newly issued Regeneron shares at $26 per share. Standard & Poor's raised its target price and reaffirmed its buy rating. Sanofi-Aventis shares were down 0.8%.

European stocks were trading higher Thursday. In London, the FTSE 100 index gained 0.68% to trade at 6,349.10. In Paris, the CAC 40 index rose 0.66% to 5,598.11. Germany's DAX index climbed 0.54% to 7,765.19.

Major Asian markets finished higher. Japan's Nikkei 225 index rose 2.38% to 15,513.74. In Hong Kong, the Hang Seng index jumped 4.06% to 28,482.54. The Shanghai composite index rose 4.16% to 5,003.33.

Treasury market

Treasury bonds rose sharply, suggesting that risk aversion has not disappeared from Wall Street, S&P MarketScope said. The 2-year Treasury note advanced 06/32 to 100-05/32 for yield of 3.04%, 10-year notes rose 26/32 to 102-17/32 for a yield of 3.94% and the 30-year bond jumped 1-14/32 to 110-25/32 for a yield of 4.35%.

Bogoslaw is a reporter for BusinessWeek's Investing channel .