Wall Street snapped a five-day losing streak today, sending stocks modestly higher after positive earnings from companies such as Texas Instruments enticed investors to pick up bargains.
Trading was choppy, as investors struggled to decide whether to buy stocks despite concerns about a possible war with Iraq. Negative profit outlooks in recent days added to the caution.
“Texas Instruments is helping technology across the board,” said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. “A willingness to buy this group is evidence that people are starting to think maybe the economy will recover this year.”
The Dow Jones industrial average rose 50.74, or 0.6%, at 8,369.47, having dropped nearly 501 points in the previous five sessions. Earlier in the day, blue-chip stocks fell as much as 62 points.
The broader market also finished higher. The Nasdaq composite index climbed 28.79, or 2.1%, to 1,388.27. The Standard & Poor’s 500 index gained 8.98, or 1%, to 887.34.
Texas Instruments gained 1.87 dollars to 16.12 dollars after the semiconductor maker’s fourth-quarter results beat analysts’ expectations. It also gave a first-quarter forecast that exceeds Wall Street’s estimate.
Qualcomm climbed 1.24 dollars to 37.93 dollars after the telecommunications company reported quarterly earnings that beat Wall Street’s estimates, citing higher demand for its products.
Two mixed economic reports released Thursday added to the lacklustre mood.
The Labour Department reported that new claims for unemployment benefits rose by 18,000 last week, signalling a continuing weak economy. Private economists had predicted an increase.
And the New York-based Conference Board said the Index of Leading Economic Indicators increased 0.1% in December to 111.3. The index rose 0.5% in November. Analysts were expecting the index to be flat.
“The index continues to show that the economy is growing modestly,” said Edgar Peters, chief investment officer at PanAgora Asset Management. “However, until there are clear signs of earnings growth, the markets can only take cold comfort in these numbers.”
Analysts say investors have been hesitant to commit to stocks given weak corporate outlooks and growing tensions with Iraq. That has led to selling that wiped out Wall Street’s New Year’s rally.
“The number one concern is Iraq,” Goldman said. “The minor players are earnings, and also more important, because those (earnings) are ancient history, is the fact that corporate CEOs are generally speaking rather cautiously about the outlook.”
McDonald’s fell 36 cents to 15 dollars after the burger giant announced its first quarterly loss ever.
Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Volume came to 1.33 billion shares, compared with 1.68 billion traded Wednesday.
The Russell 2000 index, which tracks smaller company stocks, rose 3.15, or 0.8%, to 383.68.