Stocks Finish Higher
Stocks finished higher Tuesday, after a seesaw session that found its footing from midday reports from Iraq that Saddam Hussein's two sons were killed by U.S. commandos. Investors continued to sift through a fresh batch of quarterly earnings reports, and technology shares were boosted by some better-than-expected profit news and company guidance for the third quarter.
The Dow Jones industrial average finished up 61.8 points, or 0.67% at 9,158.40. The broader Standard & Poor's 500 index closed higher by 9.31 points, or 0.94%, at 988.11. The tech-heavy Nasdaq composite index gained 24.61 points, or 1.44%, to close at 1,706.02. Semiconductor equipment stocks were higher as the group was upgraded by Lehman Brothers.
"If not for the news from Iraq, we'd have had a mixed, lackluster day," says Larry Wachtel, market analyst at Prudential Securities.
After Tuesday's closing bell, two marquee companies posted results that beat analysts' expectations. First, Internet retailer Amazon.com (AMZN ) reported net sales of $1.1 billion in the second quarter, up 37% compared to the same quarter in 2002. Operating income was $42 million, compared with $1 million a year earlier. The pro forma net loss was 11 cents per share, vs. a loss of 25 cents in the prior-year period.
Also, biotech company Amgen (AMGN ) reported second-quarter earnings of 49 cents per share, and $2.04 billion in revenue. Amgen also forecasted 2003 earnings between $1.85 and $1.95 per share. The stock was up more than $1 in after-hours trading.
Siebel Systems (SEBL ) was also expected to report after the bell.
Tech issues were in the spotlight Tuesday. Texas Instruments (TXN ) gained 7.7% on the session after reporting better-than-expected earnings after the close of trading on Monday. The wireless chipmaker posted a second-quarter profit of 7 cents per share, including a $49 million restructuring charge, on 8% higher revenues. The company expects earnings per share as high as 23 cents in its third quarter, including a 13 cents gain from its stock sale.
Corning (GLW ) finished trading 9.6% higher after posting a second-quarter loss of 2 cents per share, versus a 39 cent per share loss last year, despite a sales drop of 9.1%. The company expects third-quarter sales as high as $765 million, with earnings as high as 3 cents per share.
Lehman upgraded the chip-equipment industry to positive from neutral, and upgraded Lam Research (LRCX ), Applied Materials (AMAT ), and DuPont Photomask (DPMI ) to overweight from equal-weight.
Pharmaceutical compound developer Sepracor (SEPR ) finished 22% higher after posting a second-quarter loss of 40 cents, versus a $1.12 loss last year, on 59% consolidated revenue rise.
Computer printer maker Lexmark International (LXK ) closed 6.7% higher after SoundView upgraded the stock to outperform from neutral. Yesterday, Lexmark posted second-quarter earnings of 77 cents per share vs. 67 cents in 2002, on a 6% revenue increase.
Quest Diagnostics (DGX ) posted second-quarter earnings of $1.12 per share, versus 87 cents on a 14% rise in revenues. The company expects third-quarter earnings as high as $1.11, excluding acquisition charges. Quest fell 7.6%.
Silicon Laboratories (SLAB ) has moved 14% higher after posting second-quarter earnings of 21 cents, versus 5 cents on a 68% increase in revenues. The company expects third-quarter revenues as high as $74 million, or 21 cents (GAAP) per share.
Soap and toothpaste maker Colgate-Palmolive (CL ) posted second-quarter earnings of 62 cents, versus 55 cents, on a 7% net sales increase. The company says it expects double-digit earnings growth in the third quarter. The stock finished slightly higher.
Shipping company UPS (UPS ) reported a 13% increase in its second-quarter earnings per share to 61 cents, up from 54 cents last year. The company's international business boosted results, with a 19.8% jump in revenue to $1.37 billion, and a 154.8% rise in profits. The stock fell slightly.
On the other hand, despite a 4% increase in revenues, freight company CNF (CNF ) has posted second-quarter earnings of 31 cents per share, versus 37 cents per share. The company notes flat tonnage levels in its trucking operations, and a decline in North American air freight volumes, and expects earnings as high as 30 cents per share in the next quarter. The stock ended trading 3.6% lower.
There was also news on the merger and acquisition front. Asset-management firm Neuberger Berman (NEU ) agreed to be acquired by Lehman Bros. (LEH ) in a $2.6 billion deal. Under the agreement, Neuberger shareholders will get an implied price of $41.48 per share, consisting of $9.49 in cash and 0.496 of a Lehman share, subject to adjustment. Both stocks posted modest losses.
Companies scheduled to report earnings later this week include eBay (EBAY ), and AOL Time Warner (AOL ).
Meanwhile, the flow of economic data will be lighter this week, with the highlights being weekly jobless claims on Thursday, and durable goods orders, new home sales, and existing home sales on Friday.
After a last minute reprieve on Tuesday, Treasuries scrambled back out of the red and finished in positive territory, says economic research outfit MMS International. The market focused on events in Iraq, technical factors, and comments from Federal Reserve officials.
During the day, the 10-year note stabilized just above its lowest price levels since December.
European stock markets recovered before their close Tuesday. In London, the Financial Times-Stock Exchange 100 index finished higher by 27.9 points, or 0.69%, to 4,072.20. The index was positive thanks to bid speculation surrounding U.K. retailer Debenhams, and low cost airline Easyjet seeing strong bookings through to September, says MMS.
In France, the CAC 40 index finished higher by 11.56 points, or 0.38% to close at 3,092.62. Germany's DAX index finshed up 31.15 points, or 0.95%, at 3,318.15. A positive report and fourth quarter outlook from German chip maker Infineon helped.
Asian markets were lower on Tuesday. Japan's Nikkei 225 index closed down 41.76 points, or 0.44%, to 9,485.97. Sony shares edged down 0.79%, along with high-tech stocks such as Tokyo Electron, down 2.2%; Nikon, down 1.47%; and Canon, which lost 2.14%. In Hong Kong, the Hang Seng index lost 94.15 points, or 0.93%, to close at 10,008.71.
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