Stocks Claw Their Way Higher
Stocks battled their way higher on Wednesday, snapping an eight-session losing streak for the Dow industrials as investors waded back into the market on some decent earnings news.
The Dow Jones industrial average ended up 68.68 points, or 0.81%, to 8,541.79 after losing about 10% of its value in the last week or so. The tech-heavy Nasdaq composite index, meanwhile, added 21.86 points, or 1.59%, to 1,397.12. The broader Standard & Poor's 500-stock index gained 4.91 points, or 0.54%, to 905.96.
Among the best-performing sectors in Wednesday's session was biotechs. Underperforming groups included consumer financials, on the heels of regulatory concerns and an analyst downgrade of Capital One Financial (COF ). Wireless telecoms also underperformed.
Wall Street is looking ahead for more big earnings reports on Thursday. Among the companies scheduled to report are key tech bellwethers Microsoft (MSFT ), the world's No. 1 software maker, and Sun Microsystems (SUNW ), the computer server maker. Others set to release results include telecom equipment maker Nortel (NT ) and data storage concern EMC (EMC ).
In Thursday's economic news, initial jobless claims for the week ended July 13 are expected to decline to 390,000 from the prior week's 403,000, according to Standard & Poor's economic research unit MMS. Other reports to to be released include leading indicators for June, a gauge of economic conditions.
Nudging the market up on Wednesday was some generally favorable earnings reports from Dow components like chipmaker Intel (INTC ) and softdrink giant Coca-Cola (KO ).
Cellphone maker Motorola (MOT ) also posted quarterly results that beat expectations excluding special items, even though it recorded a record $2.3 billion net loss.
But Wednesday's session was marked by volatility as investors continue to contend with a myriad of worries -- weakness in the dollar, second-quarter earnings disappointments and the latest headlines of company and executive misdeeds.
Federal Reserve Chairman Alan Greenspan completed the second half of his testimony to the House Banking Committee, primarily fielding questions from committee members. He says he expects more companies to lower their earnings in response to changes made by the Securities and Exchange Commission.
During the first leg of his two-day semi-annual monetary policy testimony Tuesday, the Fed chief told the Senate Banking Committee that the economic recovery is gaining strength but that corporate malfeasance is posing a threat. Greenspan said the Fed looks for growth in the 3.5% to 4% area next year, with inflation expected to remain tame.
Several Dow index components released earnings updates that gave investors some hope. Most of Intel's news, however, was bleak. It reported second-quarter net income of $446 million, which was in line with its own lowered forecasts, citing slow sales in Europe. But talk of modest improvement in third-quarter revenues cheered investors. The company also plans to reduce its work force by 4,000 in the second half of the year.
Financial services concern J.P. Morgan Chase (JPM ) said quarterly profit before one-time charges rose, as strength in its consumer banking business offset weakness in trading. The shares were down slightly as its results fell short of estimates.
Meanwhile, Coca-Cola reported that both second-quarter net earnings and revenue rose 15%, with the help of new products in North America and strong sales in the Asian market.
Aerospace giant Boeing (BA ) reported second quarter net profit of $751 million, or $0.92 per share, down 3% from a year ago. Revenues of $13.9 billion, excluding a non-recurring charge, fell 10% from a year ago. The company's results were hit by a lack of new airplane orders due to the slowdown in travel.
Apple Computer (APPL ) reported lower earnings and revenue for the recent quarter, due to market weakness in the personal computer business.
After Wednesday's market close, tech bellwether IBM (IBM ) reported a sharp drop in second-quarter profits. Big Blue was scheduled to hold a conference call to discuss its results and outlook.
In a volatile session, Treasuries ended higher.
In economic news, U.S. housing starts fell 3.6% to a 1.672 million pace, while the figure for May was revised marginally higher to a 1.735 million pace from 1.733 million. Permits rose 1.4% to a 1.70 million pace from a revised 1.676 million. The decline in starts is in line with expectations, and merely reverses some of the unsustainable strength from May. The pace is still very healthy so the decline may not have much of a bullish impact on Treasuries, especially if stocks hold their gains, says MMS.
European stock markets closed higher, following the lead of U.S. stocks. In London, the Financial Times-Stock Exchange 100 index gained 168.70 points, or 4.19%, to 4,190.60. France's CAC 40 added 123.07 points, or 3.71%, to 3,440.88. Germany's DAX index added 115.07 points, or 2.89%, to 4,092.82.
Asian markets ended mixed. In Japan, the Nikkei 225 index added 45.60 points or 0.44%, to 10,296.02, led by market heavy-weight telecom and technology shares after the Bank of Japan upgraded its economic assessment for the fifth consecutive month. In Hong Kong, the benchmark Hang Seng index lost 86.37 points, or 0.83%, to close at 10,335.12.