NEW YORK (CNN/Money) -
A broad stock rally Thursday on optimism about the start of the earnings reporting period pushed the Nasdaq to its highest close in more than 2-1/2 years. However, any disappointment in the morning's monthly jobs report could halt the positive momentum Friday.
An after-the-bell announcement Thursday from IBM (IBM: up $0.26 to $93.04, Research, Estimates) could potentially create some friction Friday as well. The company said that the Securities and Exchange Commission may take civil action against it for potential violation of securities laws, as per a Reuters report.
The Nasdaq composite (up 22.57 to 2100.25, Charts) gained 1.1 percent, closing at its highest level since July 2001. The Dow Jones industrial average (up 63.41 to 10592.44, Charts) added 0.6 percent and closed at its highest level since March 2002. The Standard & Poor's 500 (up 5.59 to 1131.92, Charts) index added 0.5 percent and closed at its highest level since April 2002.
Upbeat forecasts from Nokia and Procter & Gamble, and a better-than-expected earnings report from Taiwan Semiconductor Manufacturing, fostered the advance, giving credibility to bets that fourth-quarter earnings will show marked improvement from a year earlier and therefore justify and sustain the recent huge stock rally.
"The momentum to the upside continues as the Nasdaq makes new highs," said Peter Cardillo, director of research at Global Partners Securities. "We're waiting for the slew of fourth-quarter earnings and the granddaddy of economic news tomorrow, the monthly employment report."
Dow component Alcoa (AA: up $0.46 to $38.66, Research, Estimates) kicked off the U.S. earnings reporting period shortly after the close of trade Thursday. The aluminum maker earned 39 cents per share, a nickel more than economists were expecting and a recovery from a loss posted a year earlier.
However, it is the only heavyweight earnings release due this week, with the pace of reports heating up in earnest next week.
The upbeat corporate news offered a distraction from the slightly disappointing weekly jobless claims count, which showed a rise last week from the previous week that was a bit bigger than what economists were expecting.
Of greater interest to investors this week will be Friday's Decemberjobs report. A consensus of economists surveyed by Briefing.com expects employers added 148,000 new jobs to their payrolls, after adding 57,000 in November. The unemployment rate is forecast to hold steady at 5.9 percent.
"If we see a big swing (in payrolls), that could be the big positive or the big negative that can really get this market rolling," Patrick Spears, CEO of LionsGateCapital.com, told CNNfn.
On the move
Finland's Nokia (NOK: up $2.50 to $20.47, Research, Estimates) said early Thursday that revenue and earnings per share in the fourth-quarter will top its previous forecast due to strong demand for its products. The stock rallied almost 13 percent and boosted Lucent Technologies (LU: up $0.37 to $3.88, Research, Estimates) 10.5 percent.
Late Wednesday, Dow component Procter & Gamble (PG: up $1.03 to $99.13, Research, Estimates) also raised its quarterly earnings forecast, saying the early flu season has been helping drug sales.
Outside the United States, Taiwan Semiconductor Manufacturing (TSM: up $0.39 to $11.20, Research, Estimates) reported higher-than-expected quarterly earnings that grew substantially from a year earlier, supporting recent signs that the global chip industry is recovering.
Hewlett-Packard (HPQ: up $1.33 to $24.69, Research, Estimates) rallied 5.7 percent after the company said it plans to sell a digital music player based on Apple Computer's (AAPL: up $0.77 to $23.36, Research, Estimates) iPod player. Separately, Goldman Sachs issued a bullish note on the company, saying it believes HP will beat earnings estimates due to strong sales in its holiday season.
Among other movers, Sun Microsystems (SUNW: up $0.52 to $5.51, Research, Estimates) rose 10.4 percent and topped the Nasdaq's most-actives list after Banc of America Securities upgraded the stock to "buy" from "neutral," pointing to a new deal the company has struck with Advanced Micro Devices (AMD: up $0.27 to $15.93, Research, Estimates).
Market breadth was positive and robust. Both on the Nasdaq and the New York Stock Exchange, advancing stocks beat decliners by five to three. Some 1.85 billion shares changed hands on the NYSE and 2.65 billion shares traded on the Nasdaq.
Treasury prices edged lower, pushing the 10-year note's yield up to 4.25 percent from 4.24 percent late Wednesday. The dollar was little changed versus the yen and slightly weaker versus the euro.
NYMEX light sweet crude oil futures rose 36 cents to settle at $33.98 a barrel. COMEX gold gained $1.80 to settle at $424.40 an ounce.
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