An encouraging trade report and signs that a tax-cut package would pass the Senate sent stocks edging higher Friday.

The government reported Friday morning that the U.S. trade deficit fell to its lowest level in nine months in October: $38.7 billion, 13.2 percent below September's deficit of $44.6 billion.

The Dow Jones industrial average rose 40.26 points, or 0.4 percent, to 11,410.32.

General Electric Co. led the 30 stocks that make up the index with a 3.4 percent jump to $17.72. GE announced Friday that it planned to raise its dividend by 17 percent.

The Standard & Poor's 500 index rose 7.40, or 0.6 percent, to 1,240.40. All 10 company groups that make up the index rose.

It was the third straight day that the S&P index closed at a new high for the year. It has gained 11.2 percent this year.

The Nasdaq composite index rose 20.87, or 0.8 percent, to 2,637.54.

The Treasury Department said Friday afternoon that the federal government's budget shortfall hit $150.4 billion in November. Treasury prices dropped after the report was released, pushing yields higher. The yield for the 10-year note rose to 3.33 percent, up from 3.21 percent late Thursday. - AP

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