Earnings send mixed signals

Corporate reports don't seem
to be providing much
guidance to investors

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By Lisa Singhania
Associated Press

NEW YORK >> The earnings reports that began pouring in this past week were supposed to help guide the market out of its malaise -- or at the very least, provide Wall Street with some direction. Instead, the major stock indexes have made little progress and investors seem just as befuddled about whether now is the time to buy.

That's to be expected, say analysts, who contend that until more companies can say business is improving and the technology sector shows signs of a revival, any market advances will be incremental.

"We just need to know that the drought is beginning to lessen, the blood bath is ending, We're starting to hear that a little bit, but ... investors have become more conservative. They need to hear more," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray. "I think the most realistic outcome when earnings are finished will be that we flatline."

The indexes came close to that this week, with the Dow Jones industrials and Standard & Poor's 500 index ending within 1 percent of where they started. The technology-focused Nasdaq composite index was down nearly 3 percent, despite sessions that saw tech stocks reverse course daily.

All three measures are well above their lows for 2001, which analysts say means the market is building a base from which to advance. But they remain below where they started the year: The Dow is off 2 percent, the S&P 500 down 8 percent, while the technology-focused Nasdaq has dropped nearly 18 percent.

Still, the picture gets a little rosier when investors look beyond the indexes. The Dow, Nasdaq and S&P 500 have significant technology components, making their results vulnerable to the ongoing hemorrhaging in that sector.

A look at non-technology issues suggests investors have been doing some nibbling -- albeit selectively, but enough to push some stocks consistently higher.

"Regional banks, housing, specialty chemicals are all moving forward," said Larry Wachtel, market analyst at Prudential Securities. "But no one ever talks about it. They're all focused on the indexes, which are ruled by technology."

Some examples: The stock of homebuilder Pulte Corp., for example, has more than doubled in the past 52 weeks. Gas and chemical company Air Products & Chemicals and regional bank Fifth Third Bancorp are up about 50 percent over the same period.

These aren't broad sector moves, though.

"It's on a stock-by-stock basis," said Belski, the US Bancorp strategist. "That's OK, though. It's a sign that investors are doing their homework and that's good for the market long-term."

For the week, the Dow rose 37.59 points, or 0.4 percent, despite falling 33.35 to 10,576.65 yesterday.

The Nasdaq slipped 55.42 or 2.7 percent, for the week, following a 17.22-point decline to 2,029.37 yesterday.

The S&P 500 index lost 4.83 for the week, a 0.4 percent drop. It fell 4.17 points yesterday to 1,210.85.

The Russell 2000 index, which tracks the performance of smaller company stocks, rose 0.39 to 487.93 yesterday. It ended the week down 2.78 points, or 0.6 percent.

The Wilshire Associates Equity Index, the market value of NYSE, American and Nasdaq issues was $11.212 trillion yesterday, down $59.55 billion from last week. A year ago, the index was $13.892 trillion.