Strong Earnings Reports Push Dow Up 139 Points
Stocks rallied Tuesday as strong earnings reports from technology and financial companies helped make last week’s profit worries and the resulting market sell-off a distant memory.
The Dow Jones industrial average rose 139.00 points, or 1.75%, to 8,060.44. Combined with Monday’s 74-point gain, that was more than enough to erase last week’s 200-point loss. Broader indicators also repaired all or most of the remaining damage from last week’s drop.
The better-than-expected earnings reports released late Monday by IBM and Microsoft quickly counteracted the disappointment over last week’s unimpressive profit showings by computer industry leaders such as Intel, Seagate Technology and Sun Microsystems.
IBM, which reported a 6% improvement in third-quarter earnings, surged $7.69--or the equivalent of 29 Dow points--to $105.19.
Likewise, Microsoft led the Nasdaq advance since reporting that profit for the July-September period rose about 8%, surpassing analyst forecasts by a small margin. The Nasdaq composite index rose 27.09 points to 1,712.54 as Microsoft rose $6 to $138.50.
“Last night’s reports helped people get through the fear that maybe there’s something wrong in technology. Demand is very strong,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.
Among Tuesday’s highlights:
* Financial services issues rallied after some healthy third-quarter showings by Citicorp, Chase Manhattan and Wells Fargo. J.P. Morgan, the Dow’s second-biggest gainer, rose $3.75 to $122.50. Citicorp, which also announced plans to cut costs by eliminating 7,500 jobs, jumped $5.31 to $144.19; Chase rose $2.13 to $123.69; and Wells Fargo rose $22.31 to $314.
* AT&T; rose $2.25 to $49.75 for a second strong session, after the early-Monday announcement of forecast-beating results and the appointment of a new chief executive. Lucent Technologies gained 25 cents at $86.06. Its third-quarter earnings, excluding one-time charges associated with its acquisition of Octel Communications, beat Wall Street projections.
Advancing issues outnumbered decliners by more than a 2-1 margin on the New York Stock Exchange, where volume totaled a heavy 581.79 million shares, up sharply from Monday’s sluggish pace. The Standard & Poor’s 500-stock index rose 16.67 points to 972.28.
Overseas, Tokyo’s Nikkei stock average fell 0.5%, Frankfurt’s DAX index rose 2.4% and London’s FTSE-100 rose 0.3%.
The dollar turned in a mixed performance--helped by the stock rally but hurt by a sharp widening in the American trade deficit.
