Upbeat Results Boost Stocks
Bargain hunting propelled stocks higher Thursday after better-than-expected results from Internet bellwether Yahoo and blue chips Citigroup, GE and Sears Roebuck renewed hopes that business conditions are improving.
Analysts said investors were lured by lower stock prices, particularly in the tech sector, after Wednesday’s steep sell-off. Investors also were betting that Microsoft and IBM would issue bullish forecasts, but were disappointed when both companies indicated after regular trading ended that conditions are still difficult.
Meanwhile, bond yields jumped on unexpectedly strong economic reports, and oil prices sank to a two-month low.
The Dow Jones industrial average closed up 137.77 points, or 1.4%, at 9,850.04, rebounding from Wednesday’s 211-point loss. The Standard & Poor’s 500 index rose 11.31 points, or 1.0%, to 1,138.88. The Nasdaq composite index gained 41.38 points, or 2.1%, to 1,985.82.
Winners led advancers 3 to 2 on Nasdaq and the New York Stock Exchange. Trading was active.
Fourth-quarter earnings reports this month have offered a mixed assessment--tempting many investors to preserve their gains from the recent rally, rather than risk losing them should an economic recovery be delayed. Wall Street also has gotten into the habit of driving up a stock price on hopes of strong earnings, and then selling on the news to lock in profits.
Yahoo jumped $2.25, or 13%, to $20.12 on better-than-expected earnings and signs that its ad market appears to have stabilized.
But after the market closed, investors got a reminder of how murky the technology picture is. A cautious outlook from Microsoft sent its stock down $2.71 to $67.15 in after-hours trading, despite a $1.99 gain during the day and earnings that, excluding a one-time charge, exceeded estimates.
IBM posted results that beat expectations, but the company indicated that business, while strengthening, is still tentative. The stock fell $5.25 to $114.65 in the after-hours session, reversing a gain of $2.65 during the day.
In regular trading, Dow component GE rose $1.08 to $38.75, after the company said net income rose 9% and affirmed 2002 financial targets. Retailer Sears Roebuck reported a 12% increase in net income, despite lower sales, and its shares gained $1.23 to $52.70.
Dow component Citigroup added $1.40 to $49.90. The No.1 U.S. financial services company said its fourth-quarter profit rose as low interest rates drove up revenue at its consumer banking businesses.
Among Thursday’s other highlights:
* Oil prices tumbled 89 cents to $17.97 a barrel in New York trading on news of surplus U.S. stockpiles and weakening demand. It was the lowest close since Nov. 19 and was nearing the 52-week low of $17.45 set Nov. 14.
* Mildly upbeat economic news lifted bond yields. The Labor Department reported the number of workers applying for state unemployment benefits fell last week to the lowest level in nearly six months. That damped hopes for further Federal Reserve rate cuts, and the yield on the benchmark 10-year Treasury bond climbed to 4.93% from 4.84% Wednesday.
* Dow component J.P. Morgan Chase rose 65 cents to $36.85, after falling sharply the previous session on dismal earnings. Standard & Poor’s rating agency also cut the bank’s outlook to “negative” from “stable,” citing loan and investment banking problems.
* Aerospace equipment maker and Dow component United Technologies soared $4.30, or 7.3%, to $63.35 after beating Wall Street estimates despite a 19% drop in fourth-quarter earnings.
* Kmart fell 4 cents to $1.56 on news its president has left. The troubled retailer’s stock has been tumbling on fears it is headed toward a bankruptcy filing.
* Ford Motor lost 25 cents to $14.70 after the car maker reported a net loss of $5 billion for the fourth quarter.
* Apple Computer rose $1.70 to $22.48, after it posted a profit in line with expectations and a turnaround from its year-earlier loss.
