Solid Earnings, Bright Outlooks Sustain Rally
Stocks continued the recent rally Wednesday -- driving the technology-laden Nasdaq composite index to a five-month high -- as solid earnings and rosy forecasts from firms including AT&T; and Web auctioneer EBay eased investors’ concerns about the corporate outlook.
Investors also cheered a sharp drop in oil prices. Gains in the blue-chip Dow Jones industrial average were tempered, however, by a drop in film maker Eastman Kodak, which warned its full-year results could be at the low end of estimates.
The Dow advanced 30.67 points, or 0.4%, to 8,515.66, a few points below its recent high reached on March 21. The Standard & Poor’s 500 index finished at its highest level since mid-January, gaining 7.65 points, or 0.8%, to 919.02.
Nasdaq rallied 14.80 points, or 1%, to 1,466.16, the highest closing level since Dec. 2.
Winners led losers by 5 to 3 on the New York Stock Exchange and Nasdaq in active trading.
The market dipped briefly after the Federal Reserve issued its monthly “beige book” report, which showed overall economic activity remained lackluster in March and early April as the Iraq war kept U.S. consumers wary. But analysts said the report came as little surprise.
Weaker oil prices gave the market a boost, easing concerns that consumers and companies will take a hit from higher energy prices. The June crude oil contract -- which on Wednesday became the near-month contract in New York Mercantile Exchange trading -- fell $1.34, or 4.8%, to $26.65 barrel.
Prices slumped after the U.S. government reported that crude stockpiles jumped 3% last week as oil imports hit record highs. The Organization of the Petroleum Exporting Countries is meeting today to discuss production cutbacks to prop up crude prices, which have fallen 30% from recent highs.
In notable news right after the close, Fed Chairman Alan Greenspan said he would accept yet another term as head of the world’s most powerful central bank if President Bush nominates him. On Tuesday, Bush said he supported Greenspan’s nomination to head the bank for another term.
In other highlights:
* AT&T;, the No. 1 U.S. long-distance telephone carrier, surged $3.20, or 23%, to $17.01 and ranked as the biggest gainer in the Dow. The company turned a first-quarter profit despite lower revenue and said its 2003 revenue and margins would meet or exceed its forecasts.
* Kodak ended down $1.65 at $30 after dropping as low as $28.93. The company said quarterly earnings fell almost 70% and warned that weak demand for film could hit full-year results.
* EBay jumped $5.10 to $94.32. The company posted first-quarter profit that more than doubled on triple-digit growth, and it raised its earnings and revenue targets for both the current quarter and 2003.
* California Pizza Kitchen tumbled more than 17% after at least four analysts downgraded the stock on disappointing earnings news. Shares of the L.A.-based chain slid $4.07 to $19.80.
* Drug wholesaler Cardinal Health fell $5.47 to $52.17. The firm said its quarterly profit rose and it affirmed financial forecasts for the year. But the stock fell over concerns that slowing revenue growth in the drug distribution business would hurt profit margins, analysts said.
Times staff writer Karen Robinson-Jacobs contributed to this report.
Market Roundup, C9-10
