Stocks Rise on Earnings Reports
Stocks on Tuesday snapped a four-session losing streak, buoyed by some upbeat corporate earnings and a report showing that consumer confidence rose this month.
The market advanced despite another jump in crude oil prices.
Buyers were drawn to some of the bluest of the blue chips, pushing the Dow Jones industrial average up 92.95 points, or 0.9%, to 10,461.56, the biggest one-day gain of the new year.
In other markets, the dollar surged on the consumer confidence data, and that report also pushed up Treasury bond yields.
Fourth-quarter earnings from big-name companies including U.S. Steel, Merrill Lynch, Johnson & Johnson and DuPont helped trigger a wave of buying as Wall Street opened. Some investors hunted for bargains after three straight weeks of losses in major indexes.
U.S. Steel rose 79 cents to $51.16, Merrill Lynch rallied $1.19 to $57.99, J&J; jumped $2.23 to $63.72 and DuPont was up 57 cents to $46.58.
Walt Disney rose 85 cents to a 3 1/2 -year closing high of $28.80, thanks in part to favorable comments from brokerage Smith Barney, which raised its fiscal 2005 profit estimate for Disney to $1.25 a share from $1.20.
Some heavy-industry shares may have gotten a lift from news that China’s economy grew at a faster-than-expected pace in the fourth quarter. Caterpillar surged $2.38 to $90.50.
The Conference Board’s report that its consumer confidence index edged up to a six-month high this month also gave stocks a boost, analysts said.
“I think the market definitely responded to the consumer confidence figures,” said Stuart Freeman, equity strategist for brokerage A.G. Edwards & Sons in St. Louis. “Investors are thinking, ‘Well, the consumer still feels good, so spending on the part of the consumer can continue, and that certainly drives the economy.’ ”
But other key market indexes posted smaller gains than the Dow. The Standard & Poor’s 500 added 4.66 points, or 0.4%, to 1,168.41. The technology-dominated Nasdaq composite rose 11.25 points, or 0.6%, to 2,019.95.
Also disappointing some pros was that the market remained in its recent pattern of selling off as the session progressed. The Nasdaq index had been up as much as 1.4% in the first hour of trading, and then mostly moved lower the rest of the day.
That pattern suggests that investors don’t have much conviction that the market can hang on to its gains, analysts say.
Winners had only a slim lead over losers on the New York Stock Exchange and on Nasdaq.
Oil prices remain a big concern. Near-term crude futures in New York were up 83 cents to $49.64 a barrel Tuesday, the highest since Nov. 29.
Cold weather in the East has stoked energy demand. And there is apprehension about longer-term supplies because the Organization of the Petroleum Exporting Countries has trimmed production 2.5% in the last two months, according to Bloomberg News. OPEC meets Sunday to discuss output.
Kuwait’s oil minister on Tuesday urged OPEC to maintain current production quotas despite higher prices, Agence France-Presse reported.
In currency trading, the dollar rallied after the consumer confidence data boosted the outlook for the U.S. economy. The dollar jumped to 104.23 yen from 102.72 on Monday. The euro fell to $1.296 from $1.305.
The dollar was helped by comments from Li Deshui, head of China’s National Bureau of Statistics and a member of the central bank’s monetary policy committee. He said in an interview with Reuters that the time wasn’t right to alter the yuan’s decade-old peg to the dollar.
In bond trading, the yield on the 10-year Treasury note rebounded to 4.20% from a six-week low of 4.12% on Monday. The consumer confidence report reminded investors that the Federal Reserve could justify more credit tightening as long as the economy remained healthy, analysts said.
Fed policymakers meet next week and are expected to raise their benchmark short-term rate from 2.25% to 2.5%.
