US stocks surge

Another wave of positive earnings news from companies such as IBM propelled stocks higher today, giving Wall Street its fifth advance in six sessions. The Dow Jones industrials rose nearly 240 points.

Analysts said investors were becoming more optimistic after a week of good news from General Electric to Advanced Micro Devices, despite Wednesday’s steep decline.

A belief that stocks were oversold after hitting lows last week is adding to the good mood.

“I think economy-wise the worst days have passed,” said Stuart Freeman, chief equity strategist for AG Edwards & Sons. “We are very likely in a phase where stocks are catching up from the bottoming of the economy several quarters ago.”

The Dow Jones industrial average climbed 238.86, or 3%, to close at 8,274.89, more than wiping out Wednesday’s drop of 220 points. Since October 9, blue-chip stocks have surged 989 points.

The broader market also finished sharply higher. The Nasdaq composite index rose 39.78, or 3.2%, to 1,272.20. The Standard & Poor’s 500 index gained 19.17, or 2.2%, to 879.19.

IBM rose 7.30, or 11.3%, to 72.20. On Wednesday, the technology giant reported third-quarter earnings that beat analysts’ expectations by 3 cents a share and reaffirmed its fourth-quarter outlook, prompting Merrill Lynch to upgrade the company’s stock.

Investors also took heart from a government report today showing housing construction rebounding strongly in September to a 16-year high, and shook off two other surveys indicating a dip in industrial production and a jump in jobless claims.

The Commerce Department reported that construction rose by 13.3% to a seasonally adjusted annual rate of 1.84 million, the highest level since June 1986.

“We think the confidence is coming back, the accounting scandals are past us, the banks are reporting better-than-expected results, and the balance sheets are slowly being cleaned up,” said Jason Graybill, senior portfolio manager and managing director at Abner, Herrman & Brock Asset Management.

Still, analysts acknowledged lingering uncertainties about the strength of the economic recovery as well as a possible war with Iraq.

“We think the bottom from last week ... is really going to be the lows in the markets. But we don’t see a runaway on the upside,” Graybill said.

Advanced Micro Devices jumped 84 cents, or 24.1%, to 4.33, after the computer maker said it expected sales to improve significantly in the fourth quarter.

Eastman Kodak rose 2.09 to 32.44 after the film company raised its third-quarter outlook, citing improved performance from cost cuts.

Nokia gained 1.55 to 16.55 after the world’s largest cell phone maker reported an unexpectedly large rise in third-quarter profit.

And Microsoft rose 37 cents to 50.78 ahead of the release of its third-quarter earnings report, which was due after the close of trading.

Advancing issues outnumbered decliners 5 to 2 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, rose 11.71, or 3.3%, to 362.56.