Stocks Gain Strength After Morning Losses
The stock market converted morning losses into afternoon gains Tuesday as investors largely brushed off the latest weak corporate earnings reports.
The bond market also rallied, driving yields lower, despite stronger-than-expected economic data.
On Wall Street, the Nasdaq composite index turned a 40-point loss at the start of trading into a net gain of 13.65 points, or 0.7%, for the day, closing at 1,923.22. It was the fifth advance in six sessions.
Blue chips were stronger: The Standard & Poor’s 500 index gained 1% and the Dow industrials rose 58.17 points, or 0.6%, to 10,216.73.
A dismal sales and earnings forecast from Cisco Systems late Monday weighed on the market at the opening Tuesday, but buyers quickly got the upper hand.
Some analysts said the action showed that investors have made their peace with earnings warnings and built those expectations into stock prices.
“It shows that the market is growing more insensitive to bad news, and that says the market has discounted the worst news and is now looking to better times down the road,” said Scott Marcouiller, analyst at A.G. Edwards & Sons in St. Louis.
Winners topped losers by 19 to 12 on the New York Stock Exchange and by 21 to 17 on Nasdaq in active trading.
In the bond market, yields pulled back after surging over the last week, even though economic reports Tuesday suggested surprising resilience.
The two-year Treasury note yield dipped to 4.40% from 4.46% on Monday.
Some analysts said Tuesday’s tame March consumer inflation report gives the Federal Reserve more leeway in cutting interest rates further, even if the economy appears to be stabilizing. The Fed meets May 15.
Meanwhile, better-than-expected earnings from Intel and Texas Instruments after regular trading ended Tuesday added to sentiment that the worst might be over for the tech sector.
Among Tuesday’s highlights:
* Energy and utility stocks helped lead the market higher as many of the companies reported strong first quarter earnings--a rarity on Wall Street these days.
Apache gained $1.45 to $63.85, Valero Energy rose 42 cents to $43.37, Duke Energy gained $2.09 to $44.60 and Reliant Energy jumped $1.92 to $48.92.
* Cisco, which fell to nearly $15 in after-hours trading Monday, opened trading Tuesday at $15.90 and rallied as high as $17.16, then fell back to close at $16.66, off 54 cents for the session.
Among other networking stocks, Alcatel lost $1.23 to $30.35, Brocade Communications slid $3.59 to $20.70 and Nortel Networks eased 6 cents to $15.19. But Juniper Networks jumped $2.49 to $50.87.
* Personal computer and semiconductor stocks remained weak. Dell Computer slid 76 cents to $26.35, Apple Computer lost $1.04 to $20.40 and Broadcom fell $1.71 to $29.40.
But software issues attracted buyers. Autodesk rose $1.29 to $32.42, Computer Associates surged $4.31 to $33.90 and Check Point Software Technologies gained $2.72 to $64.83.
* Drug and HMO shares were strong. Bristol-Myers Squibb gained $2.04 to $59.85, Eli Lilly rose $1.89 to $80.89, Wellpoint Health surged $2.40 to $93.10 and Oxford Health was up $1.20 to $25.86.
The biotech sector also resurged. Amgen jumped $2.52 to $57.10 and Human Genome Sciences gained $3.17 to $53.77.
* Skechers leaped $2.30 to $27.50. The Manhattan Beach-based shoemaker said Monday that it expects first-quarter earnings to beat analysts’ estimates by about 20%.
Among Southland shares, Pasadena-based construction-materials maker Ameron rose $1.08 to a 52-week high of $52.41 amid higher-than-average trading activity.
Market Roundup: C7, C8
