U.S. MARKET AVERAGES

U.S. stocks opened Thursday in the negative on rising oil prices and brokerage downgrades of Dow industrials components Coca-Cola and J.P. Morgan Chase.

The market''s decline came as no surprise after the major indexes reached new 4 1/2-year highs Wednesday for the second time in a week, and the urge to consolidate those gains overcame good economic news.

The Commerce Department reported that the trade deficit declined by 5.7% in November to $64.2 billion after hitting a record of $68.1 billion in October. Economists had expected a narrower deficit of $66 billion.

In other economic news, the Labor Department reported that the number of initial jobless claims rose by 17,000 last week to total 309,000. Economists had been expecting an increase of 24,000. The figures indicate continued strength in the labor market.

Goldman Sachs downgraded The Coca-Cola Co. to in-line from outperform and cut Anheuser-Busch Cos. to underperform from in-line.

Dow component J.P. Morgan Chase was downgraded to market perform from outperform by Piper Jaffray, as the broker believes healthy capital markets and synergies from its merger with Bank One are fully figured into the shares.

AT&T Corp was upgraded by Prudential Equity Group to overweight from neutral weight, citing increased SBC and AT&T merger synergies, aggressive share buybacks, and a lowered cost structure.

The airline sector was a notable mover to the downside, adding to its recent weakness with a 1.7% decline. The housing sector also stood out among losers, falling by nearly 1%.

Energy stocks advanced in the early going, led by the oil service sector, climbing by 1.3%. Gaming stocks posted modest gains as well.

The Dow Jones industrial average was down 5.44 points, or 0.05%, at 11,038.00, after initially rising 1.68 points, or 0.02%. The Standard & Poor''s 500 Index was down 0.66 of a point, or 0.05%. The technology-laced Nasdaq Composite Index was down 4.03 points, or 0.17%.

Bonds edged up on news of the narrowing trade gap, with the yield on the 10-year Treasury note falling to 4.44% from 4.45% late Wednesday.

MOVERS AND SHAKERS

Apple Computer (AAPL: chart) was upgraded to outperform from peer perform at Bear Stearns, citing an improved revenue and earnings growth rate, reduced risks for transition to Intel and an increased clarity into new product. Analyst Andrew Neff established a year-end stock price target of $105, and raised his 2006 earnings estimate to $2.53 a share from $2.12 and his 2007 forecast to $3.14 a share from $2.42, due to a less-than-expected seasonal decline iPod sales in the fiscal second quarter and an earlier-than-anticipated transition to Intel. Apple’s shares rose 2.5%.

Alliance Capital Management Holding L.P (AC: chart) and Alliance Capital Management L.P. said that Q4 earnings of Alliance Holding may approach or slightly exceed $1 per unit vs. earlier guidance of 75 cents to 90 cents per unit on higher base fee revenues attributable to strong investment performance and net inflows, and performance fees approximately 6 cents per unit above the high end of earlier expectations. The stock rose 5.7%.

France Telecom (FTE: chart) was downgraded by both Morgan Stanley and Goldman Sachs following the company's warning on sales growth. The stock fell 1.6%.

D.R. Horton (DHI: chart) board approved a 10-cent a share increase in the homebuilder's quarterly dividend. The dividend represents an 11.1% increase over the previous 9-cent cash payout. The company’s shares lost 1.3%.

ECONOMIC NEWS

Before the start of trading on Thursday, the Department of Commerce released its report on the U.S. trade deficit in the month of November. The report showed that the trade deficit narrowed more than economists had expected.

The Commerce Dept. said that the trade deficit narrowed to $64.2 billion in November from a revised $68.1 billion in October. Economists had expected the deficit to come in at $66.0 billion compared to the deficit of $68.9 billion originally reported for October.