Earnings News Helps Extend Stock Rally
A little bit of good profit news went a long way on Wall Street on Thursday.
The Dow Jones industrial average closed up 169.59 points, or 1.8%, at 9,410.45, extending a 188-point rally from Wednesday. Broader stock indicators also were sharply higher Thursday. The S&P; 500 gained 16.44 points, or 1.5%, to 1,097.43, regaining all of the 126 points it lost after the Sept. 11 terrorist attacks. The Nasdaq shot up 75.21 points, or 4.6%, to 1,701.47, making back all of its post-attack losses.
Advancing issues led decliners by 2 to 1 on both Nasdaq and the New York Stock Exchange on heavy trading volume.
The gains came on a smattering of positive earnings news--welcomed by investors who have been warned to expect a stream of dismal third-quarter profit reports.
Biotech company Genentech rose $3.50 to $44.30 after it exceeded third-quarter expectations. Online broker E-Trade also turned in a better performance than Wall Street had anticipated, sending its stock up $1.19 to $7.85, or 18%.
General Electric gained $1.04 to $38.95 on third-quarter results that met expectations. And Internet portal Yahoo jumped $1.57 to $12.50 after its report late Wednesday met analysts’ third-quarter projections, though the company slightly reduced its forecast for the current quarter.
“The fact that a company like GE was able to meet toned-down expectations is again the lack of a negative being a positive for the market,” said Charles G. Crane, strategist at Victory SBSF Capital Management.
Tech stocks were broadly higher, translating into a nearly 11% gain by the SOX semiconductor stock index. Strong performance by the sector is considered a sign that an economic recovery could be beginning, but there have been false starts before and stock prices in the sector have fallen considerably. Intel rose $1.45 to $24.51 and National Semiconductor surged $2.72 to $28.37.
Cisco Systems, a bellwether for networking stocks, rose $1.31 to $16.46, above the level where it traded before the attacks.
Drug stocks, in turn, fell as investors cashed in gains from a sector that has done well recently when Wall Street searched for less risky investments. Johnson & Johnson dropped $1.10 to $54.94.
The worst September retail sales in two decades failed to stop the broader market’s advance, chiefly because the disappointing results weren’t surprising given consumers’ anxieties after the attacks. Gap rose 15 cents to $13.73, despite reporting a 17% drop in sales at stores open at least a year.
In other market action:
* Bond yields jumped as the surge in stocks raised hopes the U.S. economy will recover sooner than expected, lessening the need for further Federal Reserve rate cuts. The yield on the benchmark 10-year Treasury note rose to 4.67% from 4.60% on Wednesday, while the yield on the two-year note climbed to 2.84% from 2.75%.
* L.A.-based Reliance Steel & Aluminum fell $1.28 to $23.37 after lowering its third-quarter forecast to 20 cents to 25 cents per share on expected revenue of $430 million. The metals services company previously estimated earnings at 20 cents to 45 cents.
* TheraSense Inc., a maker of glucose monitoring equipment for diabetics, raised $114 million in its initial public offering. The Alameda, Calif.-based company sold 6 million shares, or a 16% stake, at $19 apiece, giving the company a market value of $722 million.
TheraSense begins trading today on Nasdaq under the ticker symbol THER. It’s the second company to go public since Sept. 11.
* Near-term gold futures slid $3.90 to $281.80 an ounce in New York, the third consecutive decline, as a rallying stock market lured money out of gold.
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Market Roundup, C5, C6
