Stocks End Higher in Light Holiday Trading
Stocks drifted higher in light trading Monday, brushing aside another record high for oil prices amid hopes that the impending tide of third-quarter profit reports would override worries about a struggling economic recovery.
With no major economic or earnings data to steer market sentiment on the Columbus Day holiday, investors appeared to be betting that the quarterly reporting season might divert attention from Friday’s disappointing employment report and rising fuel costs.
However, analysts were dubious that the market could build much momentum on profit news alone without some resolution to the big question marks dogging the near-term outlook.
“The big troika here is economic data, oil and the election, and those things are keeping a stranglehold on the market,” said David D. Legeay, investment strategist for McDonald Financial Group.
“Barring anything to the extreme in earnings season, we’re just in a market now that will move sideways and in concert with economics, whether jobs data or retail sales data” and energy prices.
The Dow Jones industrial average rose 26.77 points, or 0.3%, to 10,081.97, a modest rebound after a drop of 1.4% last week.
Broader market measures also posted modest gains. The Nasdaq composite index rose 8.79 points, or 0.5%, to 1,928.76, while the S&P; 500 index rose 2.25 points, or 0.2%, to 1,124.39.
Advancing issues outnumbered decliners on the New York Stock Exchange and on Nasdaq.
Treasury bond markets were closed for the Columbus Day holiday, and many stock traders were out for the long holiday weekend.
The earnings season will hit full stride today with reports from Intel, Yahoo and Merrill Lynch. Other big names reporting later in the week include General Motors, Citigroup and Bank of America.
In all, more than 100 companies were scheduled to report by week’s end.
In Monday’s market highlights:
* Oil rose 33 cents a barrel to $53.64 in New York trading. A strike began in Nigeria, Africa’s largest exporter of crude, adding to supply concerns at a time of reduced output in the hurricane-ravaged Gulf of Mexico.
* Pharmaceutical stocks regained some ground. Merck, which pulled its painkiller Vioxx on Sept. 30 because of a potential link to heart disease, gained 40 cents to $30.74. The stock has fallen 32% since the withdrawal was announced. Rival Pfizer advanced 51 cents to $30.31. The stock fell 3.8% last week amid calls for the company to demonstrate whether its painkillers carry similar risks.
* Biotechnology company Chiron dropped for a fourth day in five, losing $1.38 to $34.25, after a Wall Street Journal report said U.S. regulators had inspected the drug maker’s flu-vaccine plant in England last year and found similar problems to those that caused British authorities to shut down the unit last week.
* Home Depot added $1.05, to a record $40.07, for the best performance in the Dow average. The world’s No. 1 home-improvement chain may benefit as total residential home-improvement products sales reach $452 billion by 2008, Barron’s reported. Shares of Home Depot may reach $50 within the next two years, Barron’s said.
* Texas Instruments slid 16 cents to $21.89. The world’s biggest maker of microchips that run mobile phones may see its gross margin decline in 2005 because of a “cyclical slowdown,” Deutsche Bank analyst Ben Lynch wrote in a report. Intel inched up 6 cents to $20.61, and Broadcom gained 62 cents to $28.87.
* Global Crossing slumped $3.09, or 19%, to $12.79. The operator of a fiber-optic network that emerged from bankruptcy protection 10 months ago said in a filing with the Securities and Exchange Commission that its first-half loss widened to $223 million from $124 million a year earlier.
* Among companies reporting earnings this week, Citigroup added 30 cents to $44.86, Bank of America gained 27 cents to $45.41 and Merrill Lynch lost 12 cents to $51. Yahoo lost 15 cents to $34.02.
