Wall Street optimistic
on earnings reports

Stocks up, as profits assuage
investors' worries

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By Lisa Singhania
Associated Press

NEW YORK >> A handful of positive earnings reports triggered a broad-based rally on Wall Street today, sending the Dow Jones industrials up more than 130 points as investors grew more confident about companies' prospects in the months ahead.

Wall Street even rewarded technology stocks despite worries that bellwether Intel would report disappointing earnings after the market closes.

Analysts said the investors were making bets that Intel's results would be strong enough that their last-minute purchases would pay off -- a gamble that turned out to be right as the chip maker reported it beat Wall Street expectations by 2 cents a share.

The Dow closed up 134.27 at 10,606.39, a 1.3 percent gain, according to preliminary calculations, in brisk trading that accelerated as the afternoon wore on.

Advancing issues led decliners nearly 3 to 2 on the New York Stock Exchange, with 1,847 rising, 1,221 falling and 231 unchanged. Volume came to 1.4 billion shares.

Broader stock indicators also advanced, recovering from morning losses.

The Nasdaq composite rose 1.9 percent, rising 38.20 to 2,067.32, while the Standard & Poor's 500 index gained 11.99, or 1 percent, to 1,214.44.

The Russell 2000 index rose 6.77 to 490.57. The NYSE composite index rose 5.07 to 616.65, and the American Stock Exchange composite index rose 5.08 to 889.43.

The price of the U.S. Treasury's 10-year note fell 8/32 to 98 14/32, while its yield rose 4 basis points to 5.207.

The price of the 30-year note fell 9/32 to 96 25/32 and its yield rose 2 basis points to 5.597.

The Dow got a boost from Caterpillar, which rose $3.18 to $53.55, a 6 percent gain, on earnings that beat Wall Street estimates.

"Good earnings stories and positive surprises are few and far between these days," said Robert Streed, portfolio manager of Northern Select Equity Fund. "If a company like Caterpillar shows a decent report, the stock is going to respond well and, in this case, take a couple of other industrial issues up with it."

Indeed, investors' enthusiasm extended to other industrial and manufacturing issues, including 3M, which gained $2.81 to $112.86.

General Motors Corp.'s second-quarter earnings fell by more than two-thirds from a year earlier as the automaker cut production and struggled to compete against imports made less expensive by the strength of the U.S. dollar.

"We had a reasonably solid quarter considering lower North American production to ensure appropriate levels of inventory in the context of moderating industry demand and the prevailing tough pricing conditions," said Chairman Jack Smith.

The world's biggest automaker posted a profit of $610 million, or $1.26 per share, in the second quarter, compared with $1.75 billion, or $2.93 per share, a year earlier.

The results surpassed analysts' estimates of $1.14 per share. Revenue in the period slipped 5 percent to $46.1 billion.

Pharmaceuticals were also strong despite earnings slightly below expectations from Johnson & Johnson. J&J rose $1.18 to $54.91.

Tech stocks rose, too, including Intel, which gained 77 cents to $29.90, rebounding from an early-session deficit In after-hours trading, Intel picked up another 50 cents as investors celebrated the company's good news.

Apple Computer, also expected to report after the close of trading, finished the session up $1.14 at $25.10 despite concerns that the personal computer market remains soft.

Declining stocks were hard to find. Merrill Lynch fell 45 cents to $52.70 after the investment firm reported second-quarter net income down more than 40 percent.

The activity reflected Wall Street's intense focus on corporate earnings in an economy where recovery prospects remain uncertain.

Although the Federal Reserve's six interest rate cuts so far this year are expected to eventually stimulate economic growth, Wall Street has become increasingly focused on corporate performance as the best indicator of when the economy will turn around.

Technology, which has taken an especially strong beating, is under especially close scrutiny.