Stocks Extend Streak on Tech Earnings
U.S. stocks rose for a sixth straight day Wednesday after Microsoft and IBM reported better-than-expected quarterly profits.
The Nasdaq composite index soared 35.56 points, or 2.2%, to 1,674.75.
The Dow Jones industrial average rose 13.38 points, or 0.2%, to 8,519.23, its first six-day winning streak since February. The Standard & Poor’s 500 index rose 5.99 points, or 0.6%, to 1,069.92. Advancing and declining stocks were almost evenly matched on the New York Stock Exchange and volume was moderate.
The dollar rose for a second day against the yen on skepticism that Japan will swiftly implement its bank-bailout plan, seen as pivotal to lifting the economy out of its worst recession in 50 years.
The dollar rose to 117 yen in late trading from 116.83 on Tuesday.
U.S. bonds were little changed, as investors found little incentive to buy Treasury securities with yields near three-decade lows and world financial markets stabilizing. The yield on the 30-year bond held steady at 5.07%.
In recent weeks, Compaq Computer, Intel and EMC all reported earnings that surpassed analysts’ forecasts.
Investors also took comfort in IBM’s third-quarter earnings, which rose a better-than-expected 10%. IBM gained $4.81 to $142.69, accounting for the Dow’s entire gain. Dell Computer was the most active stock in U.S. trading, rising $3.63 to $56.94.
More than half the companies in the S&P; that have reported quarterly results so far have beaten analysts’ expectations.
“Earnings are coming in reasonably well,” said Tim Stevenson, a money manager with First Union’s Capital Management Group, which oversees $50 billion.
Concern about slowing earnings growth and the impact of slowdowns in Asia and Latin America knocked 19% off the S&P; 500 from July 17 to Aug. 31. But the index has rallied 12% since Oct. 8, buoyed by two cuts in benchmark lending rates by the Federal Reserve Board.
Institutional money has been pouring into the S&P; 500 for the past three days, according to an analysis of money flow. The measure indicates that investors bought more shares when the index fell than they sold when it advanced. That may indicate gains in coming weeks.
Joseph Balestrino, senior vice president and senior portfolio manager at Pittsburgh-based Federated Research Corp., said some investors may be heartened by an apparent shift in Federal Reserve Board Chairman Alan Greenspan toward an easier money policy. He said one danger, especially for stocks, is the now widely held belief that the Fed will cut interest rates a third time when it meets Nov. 17.
In a topsy-turvy session, the Dow rose as much as 56 points and fell 59 points. Wednesday’s earnings reports held plenty of evidence of the damage Asia’s slowdown has inflicted on U.S. corporations.
Among Wednesday’s highlights:
* PeopleSoft, the No. 2 maker of business-management software, tumbled $6 to $19.75 after forecasting that sales will slow next year because of economic turmoil and competition. Investors are also concerned that corporations may delay spending on PeopleSoft’s products as they fix their year 2000 computer glitches, which causes older software to fail to recognize the millennium change.
* Exxon and Amoco, the first major U.S. oil companies to report earnings, said third-quarter profits dropped on lower crude prices. Exxon fell $1 to $75.56 and Amoco declined 56 cents to $52.19.
* 3M fell $2.25 to $84.25. The maker of Post-it Notes, which generates half its revenue outside the U.S., is expected to report lower earnings today.
Market Roundup, C7
