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Corporate Earnings Boost Stocks

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From Times Staff and Wire Reports

Investors pushed stocks broadly higher Tuesday, buoyed by positive earnings reports from the financial sector.

Major market indexes scored their first back-to-back gains of the new year, shaking off some of the gloom of the last two weeks.

The Dow Jones industrial average rose 70.79 points, or 0.7%, to 10,628.79, building on Friday’s advance of 52.17 points.

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The Standard & Poor’s 500 index gained 11.46 points, or 1%, to 1,195.98, and the technology-heavy Nasdaq composite added 18.13 points, or 0.9%, to 2,106.04.

U.S. markets had been closed Monday for the Martin Luther King Jr. holiday.

Earnings-reporting season kicks into high gear this week, and results announced Tuesday from Bank of America, Wells Fargo and other financial giants were well-received by investors.

After regular trading ended, reports from IBM and Yahoo, among others, also provided optimism about the economy, analysts said.

“We might be laying the groundwork over the next couple of weeks for a nice rally,” David Straus, who helps manage $160 million at Johnston Lemon Asset Management in Washington, told Bloomberg News. “Earnings reports are going to come in pretty good.”

Stocks struggled in the first two weeks of the year as some investors took profits from the sharp rally of November and December. Until Tuesday, major indexes had not posted back-to-back gains since Dec. 22-23.

Before the market turned around Friday, the Dow was down 2.6% for the year to date, the S&P; 500 was down 2.8% and Nasdaq had fallen 4.8%.

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“I think you saw a handful of investors deciding that the S&P;, in particular, had gone down far enough and decided to place some big bets, and that started us off toward positive territory,” said Brian Williamson, an equity trader at Boston Company Asset Management.

Advancing issues outnumbered decliners by 2 to 1 on the New York Stock Exchange and by 9 to 5 on Nasdaq.

The market climbed even though near-term crude oil futures in New York traded as high as $49.50 a barrel -- the highest since Nov. 30 -- before falling back to end the session unchanged at $48.38.

In other action, the Treasury bond market continued to be dominated by so-called curve-flattening trades -- bets that long-term debt would outperform shorter-dated debt as the Federal Reserve continues to push short-term rates higher.

The 10-year T-note ended at 4.19%, down from 4.22% on Friday, while the two-year T-note was unchanged at 3.22%. The gap between the two yields hit a new 3 1/2 -year low.

Among the day’s market highlights:

* Bank of America helped lead financial stocks higher. Its shares were up 84 cents to $45.73 after the company said fourth-quarter profit jumped 41%.

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Other bank stocks rising on earnings reports included Wells Fargo, up 77 cents to $61.46; US Bancorp, up 84 cents to $31.03; and Fifth Third, up $2.66 to $47.17.

* Ameritrade Holding surpassed profit forecasts by 3 cents a share in its latest quarter, earning 22 cents a share, buoyed by record client account balances. The brokerage also increased its 2005 profit estimate. Ameritrade gained 42 cents to $12.85.

Rival Charles Schwab added 27 cents to $11.39 on its profit report.

* IBM and Yahoo shares climbed in after-hours trading after their earnings reports. But Motorola fell to $16.90 after rising 40 cents to $17.43 in regular trading. After the bell the company reported higher fourth-quarter profit but said first-quarter results may fall short of analysts’ estimates.

* Some industrial issues were lower on earnings disappointments. 3M, a Dow index member, slumped $1.95 to $82.02. It reported a 16% jump in quarterly results but said sales fell in its unit that makes film for liquid crystal displays. That had been a fast-growing segment for 3M.

Alcan, the world’s second-largest aluminum producer, tumbled $2.48 to $44.40 after saying rising energy prices caused fourth-quarter earnings to fall 30% from the third quarter. The company will report its full results Feb. 8.

Parker-Hannifin plunged $7.34 to $66.09. The maker of fluid-power systems for aerospace and other industries said quarterly profit tripled, but analysts were disappointed by the results before a one-time gain.

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* Freeport-McMoRan Copper & Gold, owner of the world’s biggest gold mine, climbed $1.59 to $38.20 after saying fourth-quarter profit rose to a record $228 million.

* May Department Stores soared $4.37 to $32.21. The company said late Friday that its chief executive resigned, raising some investors’ hopes about a new leader.

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