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Earnings outlook
fuels large gains
NEW YORK >> A round of strong profit outlooks fueled anticipation over next week's first-quarter earnings reports, sending stocks markedly higher yesterday. The Dow Jones industrial average gained more than 115 points, posting its second triple-digit advance in the past three sessions.
Some analysts were expecting trading to be somewhat light this week before Friday's payroll figures, given the very disappointing job growth in the previous two reports.
However, the earnings outlooks were enough to keep buyers in the market, analysts said. In addition, mutual fund managers attempting to boost their portfolio returns for the quarter were more aggressive in trading.
"I think the market was oversold over the past month, and we're now seeing that cash that's been on the sidelines coming in," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. "As we get to the end of the quarter, we'll see at least a couple days of up markets heading into earnings."
The Dow rose 116.66, or 1.1 percent, to 10,329.63. The index gained 170.59 on Thursday, but dropped 5.85 on Friday.
Broader stock indicators were also higher.
The Standard & Poor's 500 index was up 14.41, or 1.3 percent, at 1,122.47, and the Nasdaq composite index gained 32.55, or 1.7 percent, to 1,992.57.
With last week's gains in mind, some analysts were cautiously optimistic that the market may have pulled out of its recent slump, at least for the short term. The lack of worrisome geopolitical news also helped the markets.
"We had a pretty significant discount introduced into the market due to the terrorism concerns," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group. "The more we can put that behind us, the better off we'll be."
Friday's jobs report will be the first piece of truly market-moving news in weeks, according to John Lynch, chief market analyst for Evergreen Investments. If the figure comes in too low, investors will worry about the economy; too high, and investors will worry about interest rates rising before year's end.
"Hopefully, we'll come in at about 100,000 new jobs," Lynch said.
"We do that, and I think our momentum will continue through earnings just fine."
With only one more week to go before earnings season begins in earnest, investors were encouraged by a number of positive earnings estimates from investment firms.
Shares of nVidia Corp. jumped $1.05 to $25.40 as Wedbush Morgan said earnings at the video chip maker should come in ahead of estimates.
Online auctioneer eBay Inc., up $1.61 at $68.41, and heavy equipment maker Caterpillar Inc., up $2.02 at $79.46, benefited from positive earnings outlooks as well.
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