Tech outlook lifts Wall St.
Wall Street finished a back-and-forth session higher Monday as investors overcame some of their nervousness about credit markets and corporate earnings and found solace in technology.
Several companies including drug maker Merck reported decent third-quarter results, but investors were unhappy with a report from rival drug maker Schering-Plough. They also were mindful of last week’s downbeat profit outlooks from several blue-chip companies.
Disappointing earnings and renewed concerns about credit had sent stocks plunging Friday, taking the Dow Jones industrials down nearly 367 points.
Monday, the Dow closed up 44.95 points, or 0.3%, at 13,566.97, after being down more than 100 points early in the session.
The S&P; 500 index rose 5.70 points, or 0.4%, to 1,506.33, and the technology-dominated Nasdaq composite index rose 28.77 points, or 1.1%, to 2,753.93.
The Russell 2,000 index of smaller companies climbed 11.29 points, or 1.4%, to 810.08.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange.
“It is not unusual for a big down day to be followed by an up day. I think the bargain hunters are out there,” said Brian Gendreau, investment strategist for ING Investment Management.
Although some big names have disappointed Wall Street with their third-quarter results, he said, about two-thirds of companies that have reported have topped estimates.
Also, he said, the outlook remains upbeat for the tech and healthcare sectors.
Treasury bond yields rose after Friday’s steep declines. The yield on the benchmark 10-year note ended at 4.41%, up from 4.39% late Friday.
Asian and European stock markets fell sharply early Monday on the heels of the U.S. market plunge Friday.
Hong Kong stocks dived 3.7%, the Singapore market fell 2.8%, Tokyo shares dropped 2.2% and the German market was off 1.1%.
Some analysts had expected the U.S. market to sink again Monday in part because of another drop in the dollar in foreign trading after a weekend meeting of finance ministers of the Group of 7 industrialized nations failed to bring a call to action to stop the dollar’s decline.
But the greenback rallied in New York on Monday. The euro fell to $1.416 from a record high of $1.43 on Friday. Some traders cited profit taking after the recent surge in the euro and other currencies.
Gold fell as the dollar rebounded. Near-term gold futures in New York slid $8.20 to $755.80 an ounce. Gold reached 27-year highs last week.
Crude oil futures settled down $1.04 to $87.56 a barrel on the New York Mercantile Exchange.
Though the major U.S. stock indexes showed signs of strength Monday, many on Wall Street remained worried about how problems in the financial markets might drag on corporate and economic growth.
“It may take a little time here, a week or two, of trying to heal,” said Steven Goldman, chief market strategist at Weeden & Co.
Dow component Merck surged $1.53, or 2.9%, to $54.64 after reporting a 47% increase in operating earnings and raising its profit forecast for the year.
Schering-Plough’s profit gain, however, fell short of expectations because of higher research costs. The drug maker fell $4.37, or 13%, to $28.34.
Another Dow stock, Walt Disney, rallied 87 cents to $34.68 after Banc of America Securities said it expected the company’s fiscal fourth-quarter profit to exceed estimates, helped by its cable and consumer-products businesses. Disney is up 2.6% this year, trailing the 6.2% gain of the Standard & Poor’s 500 index.
Strong tech earnings gave a lift to investor sentiment.
Apple reported fiscal fourth-quarter earnings that handily topped Wall Street’s expectations. The company shipped a record number of Mac computers and sold more than 1 million iPhones. Apple shares, which finished the regular session up $3.94, or 2.3%, at $174.36, rose 6% in after-hours trading.
In a speech in Washington, Federal Reserve Gov. Randall Kroszner said problems with structured credit products -- which damped the profits at several banks in the third quarter -- were easing, but gradually.
In other market highlights:
Home builders’ depressed shares rebounded, in what some analysts said was “short covering” by traders who had bet that the stocks would slide and were closing out their winning trades. An S&P; index of 15 builder stocks surged 6.7% after hitting a multiyear low on Friday.
KB Home jumped $1.54 to $27.25, Standard Pacific surged 58 cents to $5 and Lennar gained $1.48 to $22.56.
Caterpillar, which helped trigger Friday’s market rout with earnings that were below expectations because of weakness in some of its U.S. businesses, fell as low as $71.63 on Monday but rebounded to end down 7 cents at $73.50. Friday the stock tumbled $4.09, or 5.3%.
Conglomerate 3M, which slumped 8.6% on Friday after its quarterly sales fell short of expectations, lost 34 cents, or 0.4%, on Monday to close at $86.28.
In the financial sector, Wells Fargo rose 96 cents to $33.82, Goldman Sachs added $4.49 to $222.18 and Countrywide Financial was up 45 cents to $15.68.
American Express rose more than 2% in after-hours trading after the company said higher spending by cardholders pushed third-quarter profit up 10%. The stock fell 24 cents to $56.87 in regular trading.
