Investors awaiting Intel, IBM reports
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Associated Press
NEW YORK — Investors, cautious despite a handful of satisfactory earnings reports, gave stocks a tentative advance today while they awaited key quarterly reports from Intel and IBM.
Analysts said investors were buying lightly because of the relatively low prices of some stocks, but still found reasons to sell in the absence of concrete indications that business is improving.
The market was also trying to assess the effect of the Sept. 11 terror attacks on companies, although it looked past a Federal Reserve report showing a drop in manufacturing after the assaults. Instead, investors focused on earnings from Intel and IBM, due after the close.
"They're two bellwethers for the market," said Steven Goldman, market strategist at Weeden & Co. "Their results could set the tone for trading on Wednesday."
The Dow Jones industrial average closed up 36.61 at 9,384.23, according to preliminary calculations. Broader stock indicators also managed small gains. The Standard & Poor's 500 index was up 7.57 at 1,097.55 while the Nasdaq composite index rose 25.76 to 1,722.07.
The advance came after a pause yesterday, when doubts about earnings left the major stock indexes narrowly mixed. The stocks of several big companies moved higher on better-than-expected earnings today, but those gains failed to translate into any broader rally for the market.
Johnson & Johnson rose $1.05 to $56.77 after its third-quarter results came in 2 cents a share higher than analysts expected. Discount broker Charles Schwab also was higher, advancing $1.10 to $12.10 after it beat analysts' predictions.
Analysts noted investors were bidding up the stocks of companies which, in many cases, had drastically lowered forecasts because of the weak business environment.
"These results are disappointing from the standpoint of comparisons from the third quarter a year ago, but are in line with what companies had been guiding expectations down to," said Bill Barker, investment consultant with Dain Rauscher. "Obviously, investors are willing to look through this in anticipation of an economic recovery and some earnings improvement as we go forward into 2002."
He believed the mild buying that was going on today reflected optimism that the nine interest rate cuts this year and $60 billion in proposed government spending to reinvigorate the economy will pay off.
But with companies yet to benefit from those monetary and fiscal measures, investors punished companies with disappointing earnings. Caterpillar fell 17 cents to $48.03 after the heavy equipment manufacturer reported results below expectations.
In the tech sector, attention was focused on bellwethers Intel and IBM, scheduled to report their earnings later today. Intel advanced 58 cents to $24.96, while IBM dropped 15 cents $101.85.
The market has been broadly rebounding for more than three weeks as Wall Street recovers from the massive selloff that followed the attacks on the World Trade Center and the Pentagon.
Last week, stocks reached levels not seen since before the attack. Even a handful of reports of anthrax around the country — a possible sign of more terrorist activity — has failed to upset Wall Street's generally positive trend.
In today's trading, the market also digested a new report showing that — not surprisingly — industrial activity plummeted in September as the terror attacks dealt a new blow to the nation's battered manufacturing sector. It was the 12th-straight month of decline in the data collected by the Federal Reserve.
Advancing issues led decliners nearly 4 to 3 on the New York Stock Exchange. The Russell 2000 index gained 4.44 to 434.53.
