Stocks reversed their earlier losses to finish in positive territory Tuesday, as the major indexes reached new recovery highs in the process. Investors digested a heavy dose of third quarter earnings news. Trading remained confined to a very narrow range as investors looked ahead to the quarterly earnings report from Intel (INTC ), which was released after the close of trading.
The Dow Jones industrial average added 48.6 points, or 0.50%, to 9,812.90. The broader Standard & Poor's 500 index gained 4.13 points, or 0.39%, to 1,049.48. The tech-heavy Nasdaq composite index finished up 9.67 points, or 0.50%, to 1,943.20.
After Tuesday's close, Intel reported earnings at the high-end of analyst expectations. The chipmaker posted third quarter earnings of 25 cents per share, vs. 10 cents one year earlier. Revenues hit $7.8 billion for the quarter. In after-hours trading, the stock encountered selling pressure on the news, but "whipsaw gyrations are typical immediately after releases," says economic research outfit MMS International. "Of note, gross margins were expected to increase towards roughly the 60% level in the forth quarter, and up from 58.2% in the third quarter."
Before Tuesday's opening bell, Johnson & Johnson (JNJ ) reported third quarter sales of $10.5 billion, up 15% compared to the same period last year, beating expectations. Net earnings rose 20% to $2.1 billion, and the company posted earnings per share of 69 cents, vs. 57 cents. The company says it's pleased by the first full-quarter impact of the CYPHER Sirolimus-eluting Coronary Stent in the U.S. The stock gained 2.3%.
EMC (EMC ) says it expects earnings per share of 7 cents in the third quarter (including a 2 cents tax benefit) on $1.51 billion in consolidated revenue. The stock fell 7.5%.
EMC also announced plans to acquire Documentum (DCTM ), in a transaction valued at $1.7 billion. The deal is seen as diluting EMC's earnings per share by 2 cents in the first quarter of 2004, but not impacting the remainder of the year. Meanwhile, Documentum sees third quarter earnings per share as high as 5 cents (GAAP) on 31% higher revenue. S&P keeps its hold rating. The shares traded 17% higher.
Bank of America (BAC ) finished slightly higher after posting third quarter earnings of $1.92 per share, vs. $1.45 on a 14% revenue rise.
Merrill Lynch (MER ) has reported a 16% rise in revenue, and earnings per share of $1.04 vs. 73 cents in its third quarter (including items). The stock ended 1.4% lower.
Boston-based investment manager State Street (STT ) posted 60 cents per share (GAAP), vs. 56 cents in its third quarter on an 18% uptick in total revenue. The stock added 5.8%.
Delta Air Lines (DAL ) posted a third quarter loss of $1.36 per share, vs. a $2.67 loss, despite flat operating revenue growth. The shares slipped 6.6%.
First Data (FDC ) finished the day down 6.7% after posting third quarter earnings per share of 49 cents vs. 45 cents (GAAP) on a 10% rev. rise. The company expects its 2003 EPS to settle in the middle of the $1.87 to $1.93 range. JMP Securities downgraded the company to market perform from outperform, S&P keeps its accumulate rating.
In media, Dow Jones (DJ ) posted third quarter earnings of 11 cents per share, vs. 3 cents (including items) on 6.7% higher revenue. The company reported 29% higher total Wall Street Journal September ad linage, and sees around 40 cents EPS in the forth quarter (before items). Merrill Lynch downgraded the stock to neutral from buy based on valuation. The stock dropped 2.1%.
Scripps (SSP ) posted third quarter earnings per share of 4 cents, vs. 57 cents, despite a 24% operating revenue rise. The company expects a forth quarter EPS as high as 97 cents. The stock ended 5.6% higher.
Companies releasing earnings later this week include General Motors (GM ) on Wednesday morning, 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.
In economic news, the BTM-UBS retail chain store sales index declined by 0.5% in week ended Oct. 11, after rising 1.3% the week before. According to the report, demand for seasonal merchandise slowed as the weather warmed in some areas.
The later part of the 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.
Treasuries made a valiant attempt at a come-back Tuesday after opening on a down-note thanks to Monday's stock rally, but squandered their recovery and finished at the low end of the session, says MMS. There was little to give bonds much direction, though there has been some anticipation of decent economic data on the immediate horizon.
The U.S. dollar has drifted lower in New York morning trade, after a promising recovery over the long weekend, says MMS. From the $1.17 area yesterday, the euro broke below $1.16 before cutting those losses in half back to $1.1660.
European stock markets finished lower on Tuesday. London's Financial Times-Stock Exchange 100 index dropped 28.2 points, or 0.65%, to 4,334.10.
In Paris, the CAC 40 was down 15.44 points, or 0.46%, to 3,344.90. Germany's DAX index finished down 0.46 point, or 0.01%, to 3,538.13.
Japan's Nikkei 225 index gained 180.39 points, or 1.67%, to finish at 10,966.43. Tokyo Electron added 5.93%, on news that the company's estimated interim loss would be smaller than initially thought. Sumitomo Trust gained 6.69%, on the news that it would pay back public capital to the government by the end of its fiscal year 2003. Softbank soared 10.76%.
In Hong Kong, the Hang Seng index eased by 105.95 points, or 0.89%, to 11,856.02.