Uncertain investors remain indecisive
NEW YORK » Stocks recouped earlier losses to end modestly higher yesterday as investors set aside nervousness over an uneasy start to the second-quarter earnings season, marked by weak results from Alcoa Inc. and a sales warning at Lucent Technologies Inc.
With no economic data scheduled, the market focused on the impact of higher interest rates and energy costs on corporate profits. Disappointments from Dow Jones industrial Alcoa and Lucent dragged the major indexes sharply lower before they rebounded late in the session -- a sign that uncertain investors lacked information to drive stocks in one direction.
Many on Wall Street were hoping for strong earnings growth from companies in the Standard & Poor's 500 index to help stocks rally after several weeks of aimless trading. But while investors have been troubled by a handful of recent profit warnings, the bulk of earnings reports have yet to come, analysts said.
"When the question is how much economic growth is going to slow, people are going to wait and see how profit reports come in before they make new commitments," said Susan Malley, chief investment officer of Malley Associates Capital Management. "We're continuing to put money into the market, but not racing. In certain areas, we want to get as much information as we possibly can."
The Dow rose 31.22, or 0.28 percent, to 11,134.77, after tumbling as much as 75 points earlier.
Broader stock indicators also reversed course to post moderate gains. The S&P 500 added 5.18, or 0.41 percent, to 1,272.52, and the Nasdaq composite index gained 11.93, or 0.56 percent, to 2,128.86.
Bonds rallied, with the yield on the 10-year Treasury note sliding to 5.11 percent from 5.13 percent late Monday. However, the 2-year yield stood at 5.16 percent; inverted bond yields, in which short-term rates are higher than long-term, signal expectations for slowing economic growth.
A series of deadly explosions on several commuter trains in Bombay stirred some fears about terrorism and rattled U.S.-traded shares of India-based companies, with Tata Motors Ltd. sliding 48 cents to $16.50 and Videsh Sanchar Nigam Ltd. falling 51 cents to $16.76.
Overseas markets retreated on the news: Britain's FTSE 100 fell 0.67 percent, Germany's DAX index lost 1.58 percent and France's CAC-40 tumbled by 1.37 percent. Japan's Nikkei stock average, which closed before the blasts, slid 0.51 percent.
Yesterday's finicky trading came as further evidence of Wall Street's persistent confusion about the economy.