Stocks End with Solid Gains
Stocks rallied on Tuesday, led by technology issues, as investors cheered some positive corporate news and a dip in oil prices.
The Dow Jones industrial average finished up 80.96 points, or 0.79%, to 10,341.16. The broader Standard & Poor's 500 index was up 7.67 points, or 0.69%, to 1,121.30. The Nasdaq composite index advanced 14.08 points, or 0.76%, to 1,858.56.
Looking ahead, Wednesday will be light on the economic news front. Topping the bill will be remarks from Federal Reserve Chairman Alan Greenspan, whose comments are expected to be closely parsed for clues on the Fed's next move on interest rates.
Among the minor economic data to be released on Wednesday are figures on consumer credit for July which is expected to fall to $6.4 billion from $6.6 billion, according to Wall Street median estimates.
The earnings calendar will also be fairly light with tech company Comverse Technologies (CMVT ) among the few names on the docket.
Stocks news was mixed on Tuesday, the first day of trading for the week as markets were closed on Monday in observance of the Labor Day Holiday. On the plus side, Seagate Technologies (STX ), which makes computer hard-drives, said first-quarter profit and revenue would top Wall Street's expectations thanks to stronger demand.
Among other positive tech news, networking gear maker Cisco (CSCO ) was upgraded to sector outperformer by CIBC World Markets, citing expectations for faster-than-market growth.
DVD rental outfit Netflix (NFLX ) is close to a deal that would let Netflix customers download movies over the Internet to their TiVo (TIVO ), said wire services citing a Newsweek story.
Tempering the tech optimism somewhat was news from investment bank Lehman Brothers that it cut its rating on No. 1 chipmaker Intel (INTC ) to equal weight from overweight. Lehman also reduced its rating on National Semiconductor (NSM ).
A decline in the price of oil was helpful to stocks. Crude futures fell 68 cents to $43.31, but up from the $42.73 session low. The decline came after the head of the OPEC oil cartel announced that crude supplies were adequate. Also, U.S. oil drilling facilities in the Gulf of Mexico avoided damage from Tropical Storm Frances. Higher oil prices can increase the cost of doing business for companies, lowering profits.
In other stocks news, Fleetwood Enterprises (FLE ), which makes recreation vehicles and other products, posted higher quarterly results on improved business at its mobile home division.
Struggling airline operator US Airways Group appeared heading for even more challenging times after its pilots union said it would not send the company's latest cost-cutting proposal to its members for a vote.
Drugstore chain Rite Aid (RAD ) put Wall Street on notice that its fiscal 2005 profits and revenue would fall short of expectations because of slowing pharmacy sales and lower-than-anticipated third-party reimbursement rates.
But Hovnanian Enterprises (HOV ), a homebuilder, posted 26% higher third-quarter profit and raised its 2004 earnings guidance.
Treasuries finished higher in price Tuesday as traders covered short positions. Traders were looking ahead to Fed chairman Greenspan's remarks Wednesday before a House panel.
In other economic news Tuesday, the Challenger layoff report said that layoff announcements in August hit a 6-month high of 74,150, while hirings also put in a very strong showing.
European stock markets closed higher. The Financial Times-Stock Exchange 100 index in London was up 1.80 points, or 0.04%, to 4,565.60 as UK manufacturing output unexpectedly fell 0.2% in July. GlaxoSmithKline was lower after Dresdner Kleinwort Wasserstein cut its recommendation on the stock to hold from add. AstraZeneca and Shire Pharmaceuticals were also lower. Hays was higher as fiscal 2004 results swung to a profit in the absence of reorganizing costs.
Germany's DAX index added 1.46 points, or 0.04%, to 3,889.04 as German July industrial production rose more than expected 1.6%. E.ON was lower after WestLB Equity Markets cut its recommendation on the stock to outperform from buy. T-Online International was higher as major shareholder Deutsche Telecom said it is examining ways to "reintegrate" the Internet unit.
In Paris, the CAC 40 index was up up 9.11 points, or 0.25%, to 3,682.14. Alcatel was lower as Goldman Sachs cut its rating on the stock to underperform from in line. Ciments Francais was higher after posting higher first quarter results. Lafarge was higher after saying its first half net rose 74% from year ago.
Asian markets finished higher. Japan's Nikkei 225 index gained 54.7 points, or 0.49%, to close at 11,298.94 on optimism over the domestic economy, with investors anticipating an upward revision in GDP growth for the quarter on Friday. Asahi Breweries rose after Morgan Stanley upgraded the stock to overweight while Mizuho Financial gained almost 1% after the Yomiuri Shimbun reported Norinchukin Bank will take an over 15% stake in its unit, Mizuho Securities.
In Hong Kong, the Hang Seng index advanced 31.70 points, or 0.24%, to close at 13,136.04, led by gains in property names.