Dow industrials send
stocks sharply higher
NEW YORK » A raft of strong earnings reports buoyed investors' lagging confidence and sent stocks sharply higher yesterday, with the Dow Jones industrial average turning in its best showing of the year.
Wall Street bellwether Merrill Lynch & Co. posted a record year, while U.S. Steel Corp. swung to a profit. And despite slumping profits at drug makers Johnson & Johnson and Merck & Co., their earnings met or surpassed analysts' forecasts, showing resiliency in the embattled pharmaceutical sector.
The market's gains were somewhat deceptive. Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange and advancers outpaced decliners by only 8 to 7 on the Nasdaq Stock Market -- signs that investors are picking their stocks very carefully and are quick to sell underperfomers.
The Dow rose 92.95, or 0.9 percent, to 10,461.56. The Dow had risen more than 141 points earlier in the session before losing ground, but still posted its best one-day jump since Dec. 21.
Broader stock indicators saw more modest gains. The Standard & Poor's 500 index was up 4.66, or 0.4 percent, at 1,168.41, and the Nasdaq composite index climbed 11.25, or 0.56 percent, to 2,019.95.
The plethora of earnings reports helped investors overcome ongoing fears about the upcoming Iraqi elections and oil prices that continued to climb toward $50 per barrel. A barrel of light crude was quoted at $49.64, up 83 cents, on the New York Mercantile Exchange.
A strong consumer confidence reading also helped boost stocks. The Conference Board's consumer confidence index for January came in at 103.4, up from December's reading of 102.7 and better than the 101.3 analysts expected.
"I think the market definitely responded to the consumer confidence figures," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "Investors are thinking, well, the consumer still feels good, so spending on part of the consumer can continue, and that certainly drives the economy."
The National Association of Realtors reported that pre-existing home sales fell in December to a seasonally adjusted annual rate of 6.69 million units, slightly less than the 6.8 million economists had forecast. For all of 2004, sales rose 9.4 percent to an all-time high of 6.68 million units, with historically low interest rates credited for the jump in sales.
Chemical maker DuPont Co. was up 57 cents at $46.58. The company reported declining sales and profits, but after one-time charges, the Dow component beat estimates by 4 cents per share.