Higher earnings boost stocks for a second day
NEW YORK » Stocks rose moderately for a second consecutive session yesterday on strong earnings at United Technologies Corp. and McDonald's Corp.
The day's earnings reports were mostly upbeat, although investor reactions were mixed. United Technologies, Johnson & Johnson, McDonald's and 3M Co. all reported higher profits, but J&J and 3M fell after disappointing analysts.
Since earnings season began two weeks ago, stocks have been swinging with each day's announcement as investors react to companies' earnings as well as their outlooks.
"Stocks are either going way, way up or way, way down," said Paul McManus, senior vice president and director of research, Independence Investment LLC. "There appear to be more surprises."
A decline in oil prices also helped stocks. A barrel of light crude fell $1.04 to settle at $67.06 on the New York Mercantile Exchange.
According to preliminary calculations, the Dow Jones industrial average rose 23.45, or 0.22 percent, to 10,712.22.
Broader stock indicators were also higher. The Standard & Poor's 500 index rose 3.04, or 0.24 percent, to 1,266.86, and the Nasdaq composite index rose 16.78, or 0.75 percent, to 2,265.25. The Nasdaq, which has been somewhat more volatile than other indexes in recent weeks, climbed as sentiment swung its way.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.39 percent from 4.36 percent late Monday. The U.S. dollar rose against other major currencies in European trading. Gold prices were mixed.
The market continued to stabilize after Friday's big drop, which sent the Dow down 213 points. Investors shaken by earnings disappointments last week seemed to be reassured by the latest releases; stocks also managed a moderate gain on Monday, with the Dow up more than 21 points.
But the seesaw nature of recent trading, which also saw the major indexes reach multi-year highs, is making some investors nervous.
"The choppiness we've had over the past couple weeks, the volatility, suggests stocks are vulnerable," said Jon Brorson, head of growth equities at Neuberger Berman in Chicago. "It suggests we're looking, in the months ahead, at a correction in the marketplace. A big, bad bear market? No. But a correction, especially in small and mid-cap stocks."
McDonald's hit a 5 1/2-year intraday high of $36.31 before retreating to $35.85, up 14 cents, after its fourth-quarter profit rose 53 percent on continuing strong sales at the world's largest restaurant company's U.S. outlets and improving results in Europe.