Positive earnings
overcome oil fears

NEW YORK » The Standard & Poor's 500 index and Nasdaq composite index both reached four-year highs yesterday as investors, unfazed by oil prices nearing $60 per barrel, welcomed a raft of strong earnings reports.

The earnings, led by DaimlerChrysler AG and Bristol-Myers Squibb Co., further fueled investors' confidence in the stability of the economy. They also helped Wall Street look past a slight rise in first-time jobless claims reported by the Labor Department and another sharp rise in oil prices. A barrel of light crude settled at $59.94, up 83 cents, on the New York Mercantile Exchange.

The question on many investors' minds, however, was how high the markets can go, and whether the economy over the second half of the year will support those higher share prices.

"Obviously, we had a nice day yesterday, so now I tend to think that we're digesting all these earnings and figuring out whether we can move higher," said Jay Suskind, head trader at Ryan Beck & Co. "The news has been very good, but now the market's pricing in the second half of the year even more."

The S&P 500 climbed 6.93, or 0.56 percent, to 1,243.72, its best close since June 12, 2001. The Nasdaq gained 12.22, or 0.56 percent, to 2,198.44 for its best showing since June 8, 2001.

The Dow Jones industrial average rose 68.46, or 0.64 percent, to 10,705.55, its highest level since March 15.

Bonds gained ground after the previous session's selloff, with the yield on the 10-year Treasury note falling to 4.20 percent from 4.26 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

The market's reaction to second-quarter earnings was notable given the response to first quarter results in April, when the stock markets dropped considerably.

Dow component Exxon Mobil Corp. said the recent surge in crude oil and natural gas prices were critical to its record second-quarter earnings, which rose 32 percent from a year ago. Although the energy company missed Wall Street's profit forecasts by a penny per share, Exxon Mobil added 40 cents to $60.

Federated Department Stores Inc. added 47 cents to $76.24 after it announced plans to sell 68 stores, representing $2 billion in sales last year, as part of its consolidation from its recent merger with May's Department Stores. The company also said a number of May's stores -- Famous-Barr, Filene's, Hecht's and Kaufmann's among them -- will become Macy's branches in 2006.