Stocks finished with modest gains Monday, though off their earlier highs, as the third quarter earnings season got underway, and investors expect many companies to deliver strong results.
The Dow Jones industrial average finished up 89.7 points, or 0.92%, to 9,764.50. The broader Standard & Poor's 500 index added 7.29 points, or 0.7%, to 1,045.35. The tech-heavy Nasdaq composite index added 18.22 points, or 0.94%, to 1,933.53. Asset management, biotechs and sporting goods retailers were all higher. Internet and oil stocks were lower.
The major indexes all broke out to new recovery highs, but the Columbus Day holiday trading was slow, says S&P's Advisor Insight.
Still, says Art Hogan, market strategist for Jefferies & Co., "it's good, and a precursor to what this earnings season is going to look like." Indeed, many analysts say that they've got high expectations for the third quarter, and expect companies to deliver good results.
Online auctioneer eBay (EBAY) ended 2.4% lower after Salomon Smith Barney downgraded the stock to sell from hold.
Mobile phone maker Motorola (MOT) reported a 5% rise in sales to $6.8 billion in its third quarter, compared to the same period in 2002; and net earnings of $116 million, or 5 cents per share, unchanged from last year. The company sees forth quarter earnings as high as 12 cents per share (GAAP) on sales between $7.5 billion and $7.8 billion. The company reported its third-quarter earnings a day ahead of schedule, following a Moody's downgrade of the company's credit rating on Friday. The stock finished slightly higher.
Intel (INTC) is under pressure from competitors -- including Sun Microsystems (SUNW) and Fujitsu -- who are stepping up attacks on the company, unveiling plans this week for new microprocessor chips targeted at portable computers, and server systems, reports The Wall Street Journal. The stock ended 1.1% higher.
In biotech, ImClone Sytems (IMCL), and Bristol-Myers Squibb (BMY) say that the Food & Drug Administration has accepted for filing, and review ImClone's second application for use of Erbitux, in combination with irinotecan for treatment of patients with certain type of metastatic colorectal cancer. ImClone shed 7.8%.
Meanwhile, Vical (VICL)says it has been requested to make clinical-grade supplies of an experimental DNA vaccine against the severe acute respiratory syndrome (SARS) virus for development planned by the Vaccine Research Center. The stock ended 6.3% higher.
FedEx (FDX) finished 4.1% higher after Merrill Lynch upgraded the stock to buy from neutral.
WebMD (HLTH) slipped 10% after announcing that it expects $250 million in third quarter revenue, below the $257 million analyst consensus estimate. The company sees 9 cents per share in third quarter income from continuing operations before taxes, non-cash, restructuring, and other items, below the 11 cents consensus. WebMD expects income per share of 3 cents from continuing operations.
International Game Technology (IGT) ended 11% higher after Harrah's agreed to purchase a minimum of 11,000 new coinless-capable gaming machines from the company. Merrill Lynch upgraded the stock to buy from neutral.
Sports Authority (TSA) has raised its third quarter guidance to $550 million in sales, a 1% to 2% same-store sales gain, and earnings of as much as 15 cents per share, vs. a previous guidance for as much as 5 cents. The company sees fiscal 2004 earnings ranging from $1.98 to $2.03, and notes that all estimates exclude one-time merger integration costs. The stock gained 8%.
Smithfield Foods (SFD) has become a successful bidder at auction to acquire substantially all the assets of Farmland Industries' Farmland Foods unit for $367.4 million (including liabilities). Merrill Lynch upgraded the stock to buy from neutral. The stock gained 8.5%.
Companies releasing earnings later this week include Johnson & Johnson (JNJ) and Bank of America Tuesday morning with Intel due the same day after the close. Wednesday morning sees GM (GM) while IBM (IBM) reports Wednesday evening. Coca-Cola (KO) announces Thursday morning along with wireless bellwether Nokia (NOK) while United Technologies (UTX) reports in the afternoon.
This week offers a full complement of economic reports. Among the biggies, on Wednesday investors will get word on September retail sales. They are seen ticking up 0.2% vs. a 0.6% increase in the previous month. On Thursday, a reading of prices at the consumer level in September is expected to show a 0.3% increase, according to economic research firm MMS. Weekly jobless claims come out on Thursday, while Friday will feature figures on housing starts and consumer sentiment in October.
The bond market was closed Monday, in observance of the Columbus Day holiday. Treasuries finished Friday's holiday-shortened session higher in price.
"Data is weighted toward the end of the week while gains in equityland may weigh on the overall curve," reports economic research outfit MMS International.
European stock markets finished higher on Monday. London's Financial Times-Stock Exchange 100 index edged up 51.3 points, or 1.19%, to 4,362.30.
In Paris, the CAC 40 added 54.22 points, or 1.64%, to 3,360.34. Germany's DAX index has gained 67.14 points, or 1.93%, to 3,538.39. Allianz, and Munich were higher; and the Financial Times reports that Germany's government will allow companies to deduct their stock market losses from their tax bills.
In Hong Kong, the Hang Seng index gained 26.14 points, or 0.22%, to 11,961.97. Japanese markets were closed in observance of Health Sports Day.