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Dow rises, Nasdaq falters
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January 16, 2001: 5:10 p.m. ET
Blue chips gain on strength in Merck, Procter & Gamble, 3M
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The Dow Jones industrial average rallied Tuesday as investors, worried about weak earnings among technology companies, sought safety in financial, drug and consumer products stocks.
But the Nasdaq composite index edged lower, falling for a second session, amid more concern that tech firms will lower their growth forecasts in the days ahead.
The Dow rose 127.28 points, or 1.2 percent, to 10,652.66. But the Nasdaq composite index lost 7.95 to 2,618.55 while the Standard & Poor's 500 advanced 8.10 to 1,326.65.
More stocks rose than fell. Advancing issues on the New York Stock Exchange edged out declining ones 1,749 to 1,201 as 1.1 billion shares traded. Nasdaq winners topped losers 2,414 to 1,537. More than 1.2 billion shares traded.
Intel declined in heavy trading just hours before its quarterly profit announcement. And sure enough, Intel ultimately warned that sales will decline in the current quarter.
 Microsoft also faltered two days ahead of its earnings report, which comes during a busy week for companies posting financial results for the December quarter.
After a barrage of negative earnings pre-announcements, Andrew Barrett, technology strategist at Salomon Smith Barney, said the market is nervously awaiting clues from companies about what lies ahead for this quarter and beyond.
"For (the fourth) quarter, there's just nothing to get excited about," Barrett said. "Now, the question is: Where do the companies see things going?"
Intel's and Microsoft's losses failed to drag down the Dow Jones industrial average. That's thanks to strength in Merck, Minnesota Mining & Manufacturing, Procter & Gamble and financial stocks, some of which trotted out earrings Tuesday.
Citigroup posted rising earnings that matched Wall Street forecasts. But Bank of America said its profit fell below year-earlier figures and analysts' expectations.
 "Earnings are going to be mixed," Phil Roth, chief technical analyst at Morgan Stanley Dean Witter, told CNNfn's In the Money.
In other markets, Treasury securities edged higher. The dollar was little changed against the euro but fell versus the yen.
Techs fall, 'old economy' gains
Intel (INTC: Research, Estimates) shed 75 cents to $31.38 ahead of its profit report. In the actual report, Intel, in addition to its sales shortfall, said fourth quarter earnings rose to 38 cents per share, beating forecasts by a penny.
Microsoft (MSFT: Research, Estimates) lost 94 cents to $52.56. The software maker is expected to post flat quarterly earnings of 47 cents late Thursday.
But many financial stocks rose amid a mixed batch of earnings in the sector.
 Dow component Citigroup (C: Research, Estimates) gained $1.56 to $54.69 after saying fourth-quarter earnings rose to $3.33 billion, or 65 cents a share, from 56 cents a share a year earlier. The figure met Wall Street expectations.
Bank of America (BAC: Research, Estimates) advanced $1.88 to $50.94. The nation's biggest bank in terms of revenue said fourth-quarter earnings fell to $1.39 billion, or 85 cents per share, from $1.10 in the year-earlier period. That was a penny below lowered forecasts.
Wells Fargo (WFC: Research, Estimates) climbed $1.25 to $49.94 after saying its fourth-quarter profit rose 9 percent to $1.13 billion, or 65 cents per diluted share.
And J.P. Morgan Chase (JPM: Research, Estimates), a Dow component scheduled to report quarterly results Wednesday, rose 13 cents to $53.44.
Click here to see how other financial stocks are trading.
J.P. Morgan Chase is among the hundreds of companies posting quarterly financial results this week for the last three months of 2000. Early signs don't look good. More than 600 firms -- a record -- warned Wall Street that their bottom lines will fall below estimates.
Companies in the S&P 500 are expected on average to grow profits by 4.1 percent, according to First Call. That figure, if it holds, will hand corporate America its worst quarter in more than two years.
Stocks mostly sold off ahead of this period. And investors, according to one market watcher, may be waiting for forward-looking information from companies before buying stocks.
"I do think that guidance is going to be key," Grace Fey, portfolio manager at Frontier Capital Management, told CNNfn's Market Call.
Click here for a comprehensive look at the day's earnings.
Drug and consumer products stock also drew buyers Tuesday. Merck (MRK: Research, Estimates) rose $1.88 to $83.31, Procter & Gamble (PG: Research, Estimates) advanced $1.63 to $71.94 and 3M (MMM: Research, Estimates) climbed $3.69 to $113.50.
Also among the day's gainers, Ralston Purina (RAL: Research, Estimates) surged $6.88 to $31.50 after Nestle of Switzerland said it is acquiring the pet food maker for $10.3 billion. Nearly 58 million shares traded, making Ralston the most actively traded company on the New York Stock Exchange.
But Southern California Edison bond holders got some bad news. The company, one of two utilities caught in California's power crisis, said it suspended payment on $230 million in interest and principal on its debt and $366 million owed to power suppliers and other parties, putting it in default on its obligations.
Edison International (EIX: Research, Estimates), which runs Southern California Edison, fell 58 cents to $9.56.
Following a tough 2000, stocks are mostly holding up in the new year.
The Nasdaq is up 5.9 percent in 2001 while the Dow is off 1.2 percent. The S&P 500, whose market value comprises about three quarters of the entire market, is nearly unchanged on the year.
Jim Melcher, president of Balestra Capital, told CNNfn's market coverage he expects uncertain trading for the major indexes ahead. (320K WAV) (320K AIFF). 
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