Stocks edge higher after Friday sell-off
NEW YORK » Wall Street drifted to a modestly higher finish yesterday as investors sought bargains after last week's sell-off and disappointing earnings in the financial sector raised fresh concerns about corporate profits.
Surprisingly strong results from Ford Motor Co. followed by an extensive restructuring announcement kept buyers in the market despite another subpar earnings report from a major bank, this time from Bank of America Corp.
Yet despite the gains, there was a sense of increasing sobriety on Wall Street after Friday's 213-point drop in the Dow Jones industrial average, and trading was light and erratic. But the fact that the markets did not dramatically continue Friday's selling was a good sign of investor confidence, analysts said.
"You're seeing a little bit of buying come in today, which you'd expect after a sell-off," said Jay Suskind, head trader at Ryan Beck & Co. "The market is looking at what happened Friday rationally, and now it's just a wait-and-see on how other bellwether companies do on their earnings."
The Dow rose 21.38, or 0.2 percent, to 10,688.77.
Broader stock indicators were narrowly higher. The Standard & Poor's 500 index added 2.33, or 0.18 percent, to 1,263.82, and the Nasdaq composite index gained 0.77, or 0.03 percent, to 2,248.47.
Crude oil prices fell despite continued tensions in the Middle East and Nigeria. A barrel of light crude settled at $68.10, down 38 cents, on the New York Mercantile Exchange.
In a light week for economic data, investors were disappointed in the Conference Board's latest index of leading economic indicators for December, which rose just 0.1 percent. The index, a measure of future economic growth, was expected to rise 0.2 percent after a 0.5 percent rise in November.
That left the focus on earnings, and Ford delivered enough optimism to help Wall Street recover from Friday's sell-off. The automaker said improved profits from its luxury brands and the sale of its Hertz rental car division helped deliver earnings that beat Wall Street estimates by 7 cents per share. Ford, which said yesterday it would cut up to 30,000 jobs as part of a restructuring effort, rose 42 cents to $8.32.
Bank of America fell 23 cents to $43.96 after it became the latest major bank to miss analysts' earnings forecasts. The nation's second-largest bank by assets posted a drop in profits from the fourth quarter of 2004, and said weaker trading and increased consumer bankruptcies ate into earnings. The company missed earnings forecasts by 8 cents per share.