Dow hits bull's-eye|
Blue chips outperform Nasdaq, which still narrowed its losses for the year.
NEW YORK (CNN/Money) - U.S. stocks rallied Monday, propelling the Dow Jones industrial average into positive territory for the year after General Motors, Eastman Kodak and others said financial results will meet or beat forecasts, lifting hopes that corporate profits are ready to snap a 15-month slump.|
Upbeat news from the housing sector also helped, as sales of previously-owned homes rose to a record last month.
The Dow industrials rose 177.56 points, or 1.8 percent, to 10,145.71, pushing it up 1.2 percent on the year for its highest close since Jan. 8. The Nasdaq composite index jumped 45.34 points, or 2.6 percent, to 1,769.88, narrowing its 2002 loss to 9.2 percent. The Standard & Poor's 500 index gained 19.59, or 1.8 percent, to 1,109.43 and is down 3.4 percent this year.
No major accounting blowups surfaced Monday. But a sustained market gain may be needed to purge fears of overstated profits that followed Enron's bankruptcy late last year.
"It was a very gratifying day," Larry Wachtel, market analyst at Prudential Financial told CNNfn's Street Sweep. "But I'd like to see some follow-through tomorrow (Tuesday)."
Buyers were encouraged by the GM, and Kodak outlooks plus upgrades of technology leaders EMC and Sun Microsystems as well as by an upbeat newspaper article on Caterpillar. Qualcomm, Lowe's and Williams-Sonoma also upped forecasts.
Still, one company, Lumenis, which makes medical lasers, said federal regulators want details on its previously reported charges and writedowns. Its shares fell 31 percent, in a reminder of how accounting questions can still sink stocks.
More stocks rose than fell. On the New York Stock Exchange, winners topped losers nearly 2-to-1 as 1.3 billion shares changed hands. Nasdaq advancers edged decliners 5-to-4 as 1.6 billion shares traded.
In other markets, the dollar edged higher against the euro and weakened versus the yen. Treasury securities declined. Oil and gold prices slid.
The Dow's biggest gainer, Caterpillar (CAT: up $3.38 to $56.06, Research, Estimates), rose after a Barron's story called the heavy equipment maker's shares undervalued, saying they could hit $80 in the next 12 months.
General Motors (GM: up $2.37 to $55.48, Research, Estimates) raised its first-quarter earnings outlook, crediting stronger-than-expected auto sales, joining Eastman Kodak (EK: up $1.21 to $31.57, Research, Estimates), which said it's on track to meet its earnings forecasts for the first quarter and full year.
Only four of 30 Dow stocks fell Monday as the index continues to outperform the Nasdaq for 2002 as investors show preference for well-known, time-tested companies.
"There seems to be a sense down here that there is a flight to quality,"
Ted Weisberg, trader at Seaport Securities, told CNNfn's Market Call.
Economic news also helped. Existing home sales rose 16.2 percent to a record 6.04 million units on an annual basis in January, the National Association of Realtors said, as warm winter weather combined with lower interest rates to keep the housing market strong.
"Some of it is housing," Nick Angilletta, head of retail sales at Salomon Smith Barney, told CNNfn's Halftime Report. "But ... earnings and a couple of companies saying things are going to be a little better than expected are what's got this market trading higher."
Also helping the Nasdaq, wireless communications developer Qualcomm (QCOM: up $3.21 to $35.91, Research, Estimates) said it was comfortable with meeting second-quarter operating earnings estimates of 20 cents a share. The company's $25 billion market capitalization makes it the Nasdaq composite's 12th-most influential stock.
Retailers powered on news that No. 2 home improvement chain Lowe's posted fourth-quarter profit that topped forecasts. Looking ahead, Lowe's (LOW: up $1.44 to $47.49, Research, Estimates) said it expects to exceed Wall Street's sales and profit expectations for the first quarter and current fiscal year as well. Gains spread to rival Home Depot (HD: up $1.07 to $52.07, Research, Estimates), a Dow stock, which is scheduled to report quarterly results Tuesday.
Williams-Sonoma (WSM: up $1.06 to $45.15, Research, Estimates) , which in addition to its kitchen supply store runs Pottery Barn and Hold Everything stores, gave upside earnings guidance for its just-concluded and just-started years.
NYSE's most active stock, EMC (EMC: up $0.86 to $11.96, Research, Estimates) saw its share upgraded to "short-term buy" from "market perform" by C.E. Unterberg Towbin, which said the data storage systems provider's recent weakness leaves enough upside room for investors to get aggressive now.
Banc of America Securities upgraded Unix server maker Sun Microsystems (SUNW: up $0.80 to $8.87, Research, Estimates), the Nasdaq's second-most active stock, to "buy" from "market perform," according to Briefing.com.
There was one deal of note to consider: Identix (IDNX: up $1.44 to $8.39, Research, Estimates), which makes technology that records and compares fingerprints, said it will buy rival Visionics (VSNX: up $0.95 to $11.45, Research, Estimates) for $269 million.
The string of upbeat news comes amid a tough time for overall corporate profits, which are expected to decline for the fifth straight quarter when the current three-month period ends March 31. Analysts surveyed by First Call expect a rebound this spring.
Enron impact still felt
Enron's bankruptcy has raised worries about what other companies may not be saying about their profits and losses.
In the latest worry, Lumenis (LUME: down $3.99 to $8.95, Research, Estimates) said the Securities and Exchange Commission asked the maker of medical lasers for details on previously reported charges and writedowns.
Williams Communications Group (WCQ: Research, Estimates) said it may file for bankruptcy protection, joining rival Global Crossing, which sought protection from creditors earlier this year.
Ned Riley, chief investment strategist at State Street Global Advisors, expects ongoing worries about the accuracy of corporate financial reports to keep stocks from any meaningful advance in the months ahead.
"The Enron fallout is going to continue," Riley told CNNfn's Market Call. "We haven't seen the end of it."
But Monday brought a minor milestone for the Dow, which like the Nasdaq has not has a winning year since 1999.