Tech Stocks Lead Market Higher

Positive earnings news from Qualcomm, PeopleSoft, and other companies boosted the major indexes following a five-session losing streak

Stocks finished higher Thursday as investors cheered favorable earnings news following a five-session losing streak.

The Dow Jones industrial average gained 50.70 points, or 0.61%, to 8,369.47. Gains in tech heavyweights IBM (IBM ) and Microsoft (MSFT ) were partially offset by losses in telecom members AT&T (T ) and SBC Communications (SBC ). The broader Standard & Poor's 500-stock index advanced 8.98 points, or 1.02%, to 887.34. And the tech-laden Nasdaq composite index added 28.79 points, or 2.12%, to 1,388.27.

More earnings releases are coming Friday from companies such as Lockheed Martin (LMT ), Raytheon (RTN ), American Electric Power (AEP ), and UST (UST ).

On Thursday, positive earnings news, especially in the tech sector, attracted buyers. Qualcomm (QCOM ) offered some good earnings news thanks to the strong cellular business in China. Nokia (NOK ) said quarterly profit more than doubled, but warned that first-quarter sales may fall as demand for network equipment declines.

PeopleSoft (PSFT ) reported better-than-expected fourth-quarter EPS of 18 cents as lower operating costs offset a 5% revenue decline.

Computer storage provider EMC (EMC ) posted fourth-quarter operating EPS of 2 cents, vs. a 3 cent loss per share a year ago, despite 2% lower revenue. The results met the company's guidance, which was recently raised.

In the semiconductor segment, Texas Instruments (TXN ) posted fourth-quarter EPS of 6 cents, vs. a 6-cent loss (pro forma), on a 20% revenue rise. The chip maker sees first-quarter total revenue about equal to the fourth quarter and around 6 cents in EPS. Banc of America and Deutsche Bank upgraded TI's stock.

Airline stocks rose after CS First Boston upgraded shares of Southwest Airlines (LUV ) and Morgan Stanley raised its rating on JetBlue Airways (JBLU ). Also, the sector's recent decline to the lowest levels in more than four months was attracting bargain hunters.

Many gold stocks also rallied, as the price of gold rose to 6-year highs of around $363 before pulling back a bit. A weaker U.S. dollar and geopolitical tensions boosted gold.

On the downside, telecom outfits AT&T (T ) and BellSouth (BLS ) posted unimpressive fourth-quarter results. AT&T reported fourth-quarter EPS of 66 cents on an 8.6% revenue decline. The telecom services giant sees first-quarter EPS of 50 cents to 55 cents, and expects a slower rate of revenue decline in 2003 vs. 2002. The company said capital expenditures for 2003 should be about $3.3 billion to $3.5 billion. AT&T also proposed buying back $4.3 billion of its debt. JP Morgan downgraded shares of Ma Bell on Thursday.

Consumer finance stocks also fell after credit-card issuer MBNA (KRB ) released disappointing fourth-quarter results. MBNA shares declined more than 10%.

In the pharmaceutical industry, Eli Lilly (LLY ) reported fourth-quarter EPS of 68 cents, vs. 54 cents a year ago (before extraordinary item) on a 4.5% sales rise. The drug maker's outlook isn't too rosy; it sees EPS of 57 cents to 59 cents in the first quarter and $2.50 to $2.60 in 2003. The shares were lower on Thursday.

Wednesday's decline marked the fifth straight down session for stocks, bringing the major averages close to levels of the start of the year. Besides the uncertain outlook for corporate profits, worries about war with Iraq continued to hang over Wall Street.

Treasury Market

A series of upbeat tech reports got bonds off to a weak start Thursday, and Treasuries wrestled back and forth with stocks all day before succumbing to profit-taking, says MMS International. In economic news, weekly jobless claims rose by 18,000 to 381,000. The index of U.S. leading economic indicators rose 0.1%, as expected, and had little effect on the markets.

World Markets

European stock markets were mostly lower. London's FTSE index was down 55.80 points, or 1.52%, to 3,622.20. In Paris, the CAC-40 index lost 13.41 points, or 0.5%, to 2,917.97. In Frankfurt, the DAX index gained 7.97 points, or 0.28%, to 2,811.22.

In Asia, stocks finished higher. Japan's Nikkei 225 index gained 179.88 points, or 2.09%, to 8,790.92, led by high-tech stocks. Traders say supply-demand conditions in the market are improving, including fresh inflow from foreign funds in the first month of the year, according to S&P MarketScope.

Meanwhile, Hong Kong's benchmark Hang Seng index rose 24.41 points, or 0.26%, to 9,584.70.

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