Dow Gains 27 on Strong 3rd-Quarter Profit Reports
U.S. stocks closed mostly higher on Monday, with the bond market unable to get in the way thanks to the holiday.
Buoyed in part by the beginning roll-out of third-quarter corporate earnings reports, the Dow Jones industrial average rose 27.01 points to 8,072.22.
Broader indexes also gained in light trading, with the Russell 2,000 index of smaller stocks eking out another record high, up 0.18 point to 465.21, its 27th record in 33 sessions.
Winners topped losers by 15 to 13 on the New York Stock Exchange and by 22 to 20 on Nasdaq.
A sharp decline in oil prices helped sentiment.
Also, the bond market, which caused trouble for stocks late last week as yields surged, was closed Monday for the Columbus Day holiday. The 30-year Treasury bond yield had jumped to 6.42% by week’s end from 6.29% a week earlier, after Federal Reserve Board Chairman Alan Greenspan appeared to warn that the days of relatively low short-term interest rates may be ending.
Also, Germany’s central bank last Thursday raised short-term rates for the first time in five years, triggering higher rates across Europe and unnerving some stock investors.
On Monday, however, with the U.S. bond market closed, stock investors focused more on corporate earnings trends.
Robust third-quarter earnings reports from some large financial companies, including Travelers Group and J.P. Morgan, helped boost financial-services stocks.
A week into the earnings season, companies on average are topping expectations. Of the 65 companies in the Standard & Poor’s 500 index that have reported so far, 35, or 54%, have exceeded forecasts.
“Everyone’s focused on earnings, and we shouldn’t see many negative surprises,” said Jim Herrick, managing director in equity trading at Robert W. Baird & Co. in Milwaukee. “If a company is in tune with investors and the market, it will have already pre-announced bad results.”
Elsewhere Monday, key European stock markets bounced back after a drubbing late last week in the wake of the German central bank’s credit-tightening move.
In Frankfurt the blue-chip DAX stock index rose 1%, while Paris’s CAC index jumped 1.6% and London’s FTSE-100 index rose 1.4%.
Among Monday’s highlights:
* Financial stocks advancing included J.P. Morgan, up $1.69 to $120.38; Travelers, up 81 cents to $75.31; NationsBank, up $1 to $65.56; and Citicorp, up $1.75 to $140.75.
* Auto stocks were strong on optimism ahead of General Motors’ earnings report, due today, as GM said the North American market was doing well. GM shares rose $1.44 to a record $71.44. Ford added 63 cents to $49.88 after trading at a record $50.25. Chrysler gained 75 cents to $36.13.
* In the tech sector, chip giant Intel--which is scheduled to report earnings today--eased 44 cents to $92.56.
Meanwhile, Netcom On-Line surged $6.06 to $21.19 after ICG Communications said it will buy the Internet access company for $283 million in stock. ICG fell $1.06 to $25.19.
After the market closed, another big tech deal was announced, as software firm McAfee Associates said it would buy Network General.
* Also in the takeover arena, Greenfield Industries leaped $5.31 to $37.50 after Kennametal said it will buy the No. 1 drill-bit maker for about $1 billion in cash and assumed debt. Kennametal fell 88 cents to $51.56.
And Elsevier’s U.S.-traded shares rallied $3.63 to $33.25 after the Anglo-Dutch publisher and competitor Wolters Kluwer said they will swap stock to form the world’s biggest provider of trade magazines and other business information services.
* Oilfield services shares fell as the price of oil continued to slide from its recent spike on Mideast jitters. Schlumberger sank $2.25 to $86.94, Transocean Offshore dropped $2 to $56.19 and Western Atlas was off $1.13 to $91.38.
Crude oil prices plunged as the arrival of the aircraft carrier USS Nimitz in the Persian Gulf eased concern that oil exports from the region could be disrupted by Iraq-Iran tensions. Near-term crude oil futures in New York slid 78 cents to $21.32 a barrel.
In other commodity trading soybean and corn prices jumped as farmers continued to be slow to sell newly harvested crops in the Midwest and commercial grain companies competed for supplies.
At the Chicago Board of Trade, soybeans for November delivery closed 19.25 cents a bushel higher at $7.19, the highest closing price since March 14.
* Market Roundup, D16
