Posted at 11:23 a.m., Wednesday, October 23, 2002
Stocks rise as markets digest financial news
By Hope Yen
NEW YORK Wall Street managed a modest advance today, rising for a fourth time in five days as investors weighed a mixed economic assessment from the Federal Reserve against disappointing earnings from Eli Lilly.
Analysts were expecting some declines on profit-taking after two weeks of strong gains. But many investors remain optimistic that the market could sustain a real upward trend, because earnings news has largely been stronger than expected, they said.
"The market is really just digesting the huge bounce we have had," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "We had a little bit of an excuse for profit-taking, among them were Eli Lilly's guidance. But it really just appears to be healthy consolidation."
The Dow Jones industrial average rose 44.11, or 0.5 percent, to close at 8,494.27, according to preliminary calculations, having dropped 88 points yesterday. Earlier in the day, blue-chip stocks fell as much as 155 points before recovering their losses.
The broader market also finished higher. The Nasdaq composite index rose 27.44, or 2.1 percent, to 1,320.24, after declining as much as 13 points. The Standard & Poor's 500 index gained 5.98, or 0.7 percent, to 896.14.
Eli Lilly reported a 20 percent rise in earnings, meeting analysts' expectations, but the drug maker lowered its fourth-quarter outlook, citing added costs for its newer drugs. The company's shares fell $4.91 to $58.09.
The market, however, got a boost on some mixed comments from the Federal Reserve.
In its survey of regional economic conditions, the Fed reported a sluggish economy, citing problems of weak retail sales and a soft job market. The survey fostered hope of another interest rate cut when the Fed meets Nov. 6.
Fed Chairman Alan Greenspan said separately that Americans' productivity should continue to grow in the coming years, although not as strong as this year's surge.
Analysts say investors have been more hopeful following a two-week rally prompted by better-than-expected earnings from companies such as General Motors and IBM. Since Oct. 9, when the Dow hit a five-year low, the blue chips have gained about 1,100 points.
Still, analysts say the market remains vulnerable. They cite continuing investor concern about corporate earnings in the coming quarters as well as "geopolitical" risks, such as a war with Iraq.
Citigroup dropped 4 cents to $35.49 after the New York attorney general's office said it will question chairman and CEO Sanford Weill as part of a broad probe into the company's research activities.
Gainers included Computer Associates, which rose $2.65 to $14.75, after the software company raised its earnings forecast for the year, citing cost savings.
Advancing issues outnumbered decliners 7 to 6 on the New York Stock Exchange. Volume was moderate. The Russell 2000 index, which tracks smaller company stocks, rose 6.29, or 1.7 percent, to 368.95.