Strong earnings bring buyers back
NEW YORK » A string of positive earnings reports renewed confidence in stocks yesterday and sent the major indexes sharply higher as investors shook off a steep loss posted by General Motors Corp.
While GM's troubles deepened after it announced a quarterly loss far beyond analysts' expectations, investors were heartened by better news from fellow Dow industrials Caterpillar Inc., AT&T Corp. and others. That's helped Wall Street overcome last week's sharp drop, blamed on poor results from a number of corporations.
Wall Street's concerns about the state of the economy eased after the Commerce Department reported an all-time high in factory orders for big-ticket items. Durable goods orders rose 1.3 percent for December, better than the 1 percent forecast by economists.
"The durable goods numbers are telling us that businesses are spending money, and that the outlook for the economy is solid," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "And after last week, the earnings numbers are encouraging. So we're seeing a good bump today."
The Dow rose 99.73, or 0.93 percent, to 10,809.47. The index turned positive for the year-to-date after dropping into the red after last Friday's 213-point sell-off.
Broader stock indicators also made gains. The Standard & Poor's 500 index added 9.15, or 0.72 percent, to 1,273.83, and the Nasdaq composite index gained 22.35, or 0.99 percent, to 2,283.00.
Bonds fell for a second session, with the yield on the 10-year Treasury note rising to 4.51 percent from 4.48 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices moved lower.
Crude oil futures rebounded after OPEC ministers said no immediate production cuts were expected, though a cutback could occur down the road. A barrel of light crude settled at $66.26, up 41 cents, on the New York Mercantile Exchange.
Stocks moved up on higher volume, with investors regaining confidence and returning to the market after last week's sell-off. However, with the economy projected to slow gradually through the rest of the year, some analysts remained concerned that the multi-year highs reached this month could be the best the market can do this year.
"The market strength is good right now, but when I look ahead, I'm feeling rather torn right now," said Ken Tower, chief market strategist for Schwab's CyberTrader. "My forecast this year is for a bear market, but for now, I'm willing to give the bulls the benefit of the doubt."