Earnings Reports Boost Stocks; Nasdaq at Record
Good earnings news from big-name companies helped send major stock indexes up sharply on Tuesday, with the Nasdaq composite hitting a new high.
The broad market continued to struggle, however. Meanwhile, a key commodity-price index hit a 21-year low.
On Wall Street the Nasdaq composite surged 64.10 points, or 2.7%, to a record 2,433.41, boosted in part by a 6% jump in shares of Microsoft to a new high.
The software giant’s shares gained $9.69 to $171.56 one day after it set a 2-for-1 stock split.
The Dow industrials jumped 121.26 points, or 1.3%, to 9,324.58, though the blue-chip index remains 3.3% below its recent peak.
Besides Microsoft, a host of other well-known companies also have set stock splits in recent days, several in tandem with robust fourth-quarter earnings reports. The splits and the earnings helped attract investors to the stocks, including Xerox, up $10.94 to $116.31, and McDonald’s, up $3.06 to $78.94.
“In this slow-growth economy, people are paying up for earnings growth,” said Ashi Parikh, a money manager with Banc One Investment Advisors, which oversees $60 billion. “These are the companies that are delivering.”
Despite strength in big-name stocks, however, winners outnumbered losers by just 1,587 to 1,464 on the New York Stock Exchange, in active trading.
“You have a tug of war in the market,” said Barry Hyman, senior market analyst with Ehrenkrantz King Nussbaum. Despite good earnings news from many companies--especially tech and telecom firms--he noted that “multinational companies are suffering from global crises.”
Indeed, Coca-Cola lost 38 cents to $62.56 on Tuesday--though it recovered from a low of $60.06--after reporting a sharp drop in earnings.
In other markets, falling prices for sugar, soybeans, crude oil and gold helped drag the Bridge/Commodity Research Bureau index of key commodities down 0.5% to 187.60, its lowest close since 1977.
Brazil’s currency devaluation was the latest blow to commodity markets, as traders bet that lower prices on Brazilian soybeans and oranges will drag global prices even lower.
Among Tuesday’s highlights:
* Stocks reacting positively to earnings reports included two Dow components: Merck, up $6.50 to $144, and Johnson & Johnson, up $3.75 to $82.50. Also, home builder Centex rose $1.81 to $42.44 and Computer Sciences jumped $2.75 to $65.75.
* Losers tied to earnings news included Boeing, down $1 to $35; Black & Decker, down $4.25 to $53.63; and Service Corp. International, down $15.31, or 45%, to $19.13 after the largest funeral home and cemetery owner said fourth-quarter earnings will lag analysts’ expectations because--no joke--fewer people died in its biggest markets.
* Microsoft led another big rally in leading tech shares. Also rising sharply were Intel, up $6.31 to $136.94; Novellus Systems, up $5.88 to $66.75; Xilinx, up $5.44 to $82.56; and Sun Microsystems, up $5.56 to $106.63.
* In the Internet sector, buyers flocked back to Yahoo, up $39.25 to $351.25; Mindspring Enterprises, up $14.31 to $102.88; and America Online, up $9 to $155.
But Inktomi sank $18.44 to $129.81 after Microsoft decided to phase out Inktomi’s Net search engine in favor of AltaVista.
* News of rising consumer confidence lifted some retail shares. Gap shot up $4.31 to $63.44, Abercrombie & Fitch jumped $2.06 to $73.94, Sears gained $1.06 to $41.50 and Wal-Mart climbed $1.56 to $83.56.
* Bell phone stocks rebounded after a drubbing on Monday in the wake of a Supreme Court decision potentially favoring long-distance rivals. BellSouth surged $4.19 to $47.19 and Bell Atlantic rose $1.13 to $55.56.
Market Roundup, C9
