NEW YORK (CNNmoney) - U.S. equity markets rallied by the close Tuesday, as stock investors pulled out of a tight trading range ahead of key quarterly results from IBM and Intel.
As expected, both companies reported declines in per share earnings from the same period a year earlier. Throughout the day, Intel (INTC: up $0.58 to $24.96, Research, Estimates), the No. 1 chipmaker, showed modest gains ahead of its news, while computer hardware maker IBM (IBM: down $0.15 to $101.85, Research, Estimates) trudged lower.
The Nasdaq composite index added 25.76 to 1,722.07, its highest close since September 5. The composite has closed in the red only three times in October. The Dow Jones industrial average gained 36.61 to 9,384.23. The Standard & Poor's 500 tacked on 7.56 to end the day at 1,097.54.
Stocks struggled to pull free from a breakeven range throughout most of the day, with many analysts pointing to the indexes' resiliency in the face of some negative corporate news.
"A late-day push like this is nice to see, and there's been some decent volume, which is important, but I'm not convinced it's a trend yet," Larry Lawler, head of stock trading at Dreyfus Corp., told CNNfn's Street Sweep. "Another couple of days of good earnings would bode well for this market."
After the close, IBM said it earned 90 cents a share in the third quarter, a penny better than estimates, on revenue that missed expectations. The company earned $1.08 in the same period one year earlier.
Intel (INTC: up $0.58 to $24.96, Research, Estimates) said it earned 10 cents a share, in line with estimates, on revenue that just bettered expectations. The company earned 41 cents a year earlier. In its earnings release, the company said that current fourth-quarter estimates are "reasonable."
While analysts and investors will be more focused on forward-looking statements from the companies throughout their conference calls, some market watchers were encouraged by the news.
"This will set an overall positive tone for the market in the near-term. Even the fact that they're not warning lower on future quarters is confidence building," Stephen Porpora, managing floor broker, William O'Neill & Co., told CNNfn.
Also after the close, two significant semiconductor names, Rambus and R.F. Micro Devices, reported quarterly results. RF Micro Devices (RFMD: up $0.89 to $24.42, Research, Estimates) said it earned a penny per diluted share in its second quarter, two cents better than expected, while Rambus (RMBS: up $0.10 to $11.72, Research, Estimates) earned six cents per share, two cents past estimates.
The impact of these results on technology stocks and the broader market long-term remains to be seen, as many analysts say most quarterly news is already factored in to expectations.
"The worst point of the tech cycle is probably upon us now, but the actual results and the commentary on earnings are no surprise," said Ned Riley, chief investment strategist at State Street Advisors. "There's a selling exhaustion in regards to tech stocks. People are trying to focus on the road ahead. Looking forward; there is a lot of upside potential."
Asian stocks finished higher Tuesday, with Tokyo's Nikkei index up 1.8 percent. European markets closed mostly higher.
Treasury prices were slightly higher, with the 10-year note yield at 4.56 percent. The dollar backed off five-week highs against the yen, but still held its own, although it slid against the euro.
Market breadth was positive. On the New York Stock Exchange, winners edged losers by more than a 4-to-3 margin as 1.17 billion shares traded. On the Nasdaq, advancers bested decliners by nearly 6 to 5 as 1.81 billion shares changed hands.
IBM, United Technologies, weigh on the Dow
The September-quarter corporate reporting period is in full bloom, with a number of companies reporting results late Tuesday and early Wednesday.
As of early Tuesday, 65 companies have reported results, with 38 beating estimates, 22 meeting estimates and 5 missing estimates, according to tracking firm First Call.
Three Dow components reported results before the open. Diversified manufacturer United Technologies (UTX: up $0.98 to $54.00, Research, Estimates) said third-quarter net income met estimates, giving the average one of its few big gainers.
Johnson & Johnson (JNJ: up $1.05 to $56.77, Research, Estimates), a health products maker, said third-quarter earnings topped estimates, while Caterpillar (CAT: down $0.17 to $48.03, Research, Estimates), the construction equipment maker, posted lower-than-expected results.
Telecoms, financials among Nasdaq's most actives
A number of chip and telecommunication shares pressured the Nasdaq after reporting results, while financial and software issues offered some respite.
Late Monday, semiconductor manufacturer Novellus Systems (NVLS: up $0.90 to $32.54, Research, Estimates) said it earned 24 cents a share in the third quarter, in line with estimates, although a number of brokerages reduced their forecasts on the company Tuesday.
In the telecom sector, Broadwing (BRW: down $3.83 to $11.50, Research, Estimates) fell after it said it lost 14 cents per share, better than analysts' estimates, but worse than the loss it posted a year earlier. Sector mate Qualcomm (QCOM: down $0.70 to $49.85, Research, Estimates) fell after Merrill Lynch lowered its 2002 earnings estimates.
Siebel Systems (SEBL: up $1.75 to $21.54, Research, Estimates) and Bank of America (BAC: up $2.16 to $57.71, Research, Estimates) were a few of the names providing indexes with some more positive momentum.
Outside of technology, consumer products company Kimberly-Clark (KMB: down $4.48 to $55.58, Research, Estimates) warned late Monday that it sees third-quarter earnings per share of 80 cents, missing estimates by a nickel.
Natural gas company Enron (ENE: up $0.67 to $33.84, Research, Estimates) earned 43 cents a share in the third quarter, in line with estimates.
As the markets stabilized later in the day, the anthrax scare faded into the background. Shares of Cepheid (CPHD: down $1.26 to $6.80, Research, Estimates), a detector of biological agents, retreated from as much as a 350 percent gain in the weeks following the Sept. 11 terrorist attacks.
Among the latest developments, the infant son of an ABC News producer in New York tested positive for the treatable skin variant of anthrax while in Washington, 11 congressional offices have been closed for testing after the FBI confirmed that a letter sent to Senate Majority Leader Tom Daschle, D-S.D., contained a particularly noxious strain. 
|
