stocks rally as earnings rise, oil prices

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    U.S. stocks rally as earnings rise, oil prices fall
    AAP News
    8:38:020 27/01/2005
    (Updates to close)
    By Megan Davies
    NEW YORK, Jan 26 (Reuters) - U.S. stocks ended higher for
    the second session in a row on Wednesday, lifted by
    better-than-expected earnings from companies such as Texas
    Instruments Inc. and a retreat in crude oil prices.
    However, it was only the second time this year that the
    Dow, the S&P 500 and the Nasdaq posted two consecutive days of
    gains. Equities have had a poor start to 2005 and on Monday,
    all three indexes closed at their lowest since November.
    Among stocks gaining was S&P 500 component Texas
    Instruments, which climbed 7.3 percent, or $1.54 to $22.66, a
    day after the world's largest maker of chips for cell phones
    posted earnings that topped a forecast it gave in December.
    The Dow Jones industrial average was up 37.03 points, or
    0.35 percent, to close at 10,498.59. The Standard & Poor's 500
    Index was up 5.66 points, or 0.48 percent, to end at 1,174.07.
    The Nasdaq Composite Index was up 26.14 points, or 1.29
    percent, to finish at 2,046.09 -- its biggest gain so far this
    year.
    "The market had got oversold," said Sam Rahman, portfolio
    manager at Baring Asset Management. "Having been super-bullish
    late last year, sentiment went very quickly -- in the space of
    three weeks -- from being very positive on the economy and
    earnings to very negative on a number of things. So it is
    technically a little oversold."
    Lower oil prices and earnings updates from companies such
    as Texas Instruments were helping on Wednesday, he said.
    "Good earnings reports are being reacted to positively,"
    Rahman said. "I think when we come out of this earnings period
    and look at the aggregate numbers, we'll still see more
    companies generating strong earnings growth versus companies
    that didn't."
    Overall, trading was active, with 1.64 billion shares
    changing hands on the New York Stock Exchange, above the 1.46
    billion daily average for last year. About 2.11 billion shares
    were traded on Nasdaq, above the 1.81 billion daily average
    last year. Advancers outnumbered decliners on the New York
    Stock Exchange by about 8 to 3 and by about 7 to 3 on Nasdaq.
    A fall in oil prices helped boost stocks. NYMEX March
    crude, which earlier had neared the $50-a-barrel mark, fell 86
    cents to settle at $48.78 a barrel. Lower oil prices generally
    boost equities because they help lift consumer spending and
    corporate profit margins.
    Among other issues, investors were increasingly focused on
    mounting tension ahead of the Iraqi elections on Jan. 30.
    Rahman thought that if there was a strong turnout from voters,
    it would be a positive for the markets next week.
    Stocks rising on improved earnings included drug maker Eli
    Lilly and Co., an S&P 500 stock, up 1.2 percent, or 65 cents,
    at $55.50 after it reported that earnings excluding special
    items beat analysts' estimates.
    Johnson & Johnson rose 1.5 percent, or 97 cents, to
    $64.65, extending gains from Tuesday when the health-care
    company reported fourth-quarter profits that beat analysts'
    estimates.
    Electronic Arts Inc., the video game publisher, rose 9.2
    percent, or $5.30, to $62.84, a day after it posted profits
    for its fiscal third quarter that beat market expectations.
    Flextronics International Ltd., the No. 1 contract
    electronics manufacturer, jumped 12.2 percent, or $1.52, to
    $13.94 a day after it posted sharply higher quarterly
    earnings.
 
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