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Stocks rise narrowly
amid light tradingInvestors are hunting for bargains
while waiting for earnings
NEW YORK >> Wall Street reversed a three-day slide yesterday as investors returned to the market in search of bargains, shrugging off high-tech profit warnings and an analyst downgrade of Internet stocks.
The advance had little conviction behind it, however, as volume remained light and the major indexes lost more than half of their earlier gains. Investors were generally making few big moves as they awaited second-quarter earnings, including results from Yahoo! Inc. and Alcoa Inc. that were released after the close.
But analysts said investors were making some bets on hopes for strong second-quarter results overall. A slight drop in oil prices also cheered the market.
"This is a little bit of a relief rally, certainly some bargain hunting," said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. "This is a very nervous market, and it needs to hear better news from corporate America, telling it that the earnings growth is still in place. We're not hearing that from the technology sector."
The Dow Jones industrial average rose 20.95, or 0.2 percent, to 10,240.29.
Broader stock indicators were narrowly higher. The Standard & Poor's 500 index gained 2.12, or 0.2 percent, to 1,118.33, and the tech-dominated Nasdaq composite index was up 2.65, or 0.1 percent, at 1,966.08.
All three major indexes had been down for the three previous sessions as investors worried that the economy was slowing. But despite the current negativity and warnings, some analysts believed a strong second quarter earnings season was still a given, in part due to the lower comparisons from a year ago, when companies were just starting to see their bottom lines recover from recession.
"I think the second quarter will see some blow-out type numbers," said Kevin Caron, market strategist at Ryan, Beck & Co. "I think that'll moderate somewhat in the second half of the year and into 2005, but the economy and earnings as a whole remains healthy."
Corporate software makers PeopleSoft Inc. and JDA Software Group Inc. both warned that their quarterly earnings would fall below analyst expectations. PeopleSoft rose 31 cents to $17.13, while JDA Software skidded 83 cents to $11.02.
Microsoft Corp. gained 8 cents to $28.10 after Chief Executive Steve Ballmer, in a memo to employees, said the company would trim $1 billion in expenses by reducing prescription drug benefits and stock discounts for its workers.
The price of the benchmark 10-year Treasury note was unchanged. Its yield was unchanged from Tuesday at 4.47 percent. The 2-year note was unchanged to yield 2.54 percent.
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