Dow up but investors play waiting game

Wall Street had a moderate rebound today as strong earnings from 3M and Citigroup helped investors overcome their disappointment in the latest Index of Leading Economic Indicators.

Analysts said investors were taking a wait-and-see attitude as many large companies prepare to report earnings this week. Among them was Texas Instruments, announcing its results after the close of trading today.

“We’ll be watching to see what we’re going to do tomorrow morning,” said Michael Murphy, head trader at Wachovia Securities in Baltimore.

“It’s a crazy time. We’ve had a great year and people are a little bit hesitant … they do not want to make mistakes.”

Some investors may be hoping to cash in profits, as many believe the third quarter’s strong earnings have pushed stocks as high as they will go.

“People may be feeling it’s time for a rest … to sit back and see how the market really is faring,” said Richard Dickson, senior market strategist at Lowry’s Research Reports in Palm Beach, Florida. “The attitude is that there’s no rush.”

The Dow Jones industrial average closed up 56.15, or 0.6%, at 9,777.94, having gained 0.5% last week.

The broader market also closed higher. The Nasdaq composite index rose 12.78, or 0.7%, to close at 1,925.14, following a weekly loss of 0.2%.

The Standard & Poor’s 500 index rose 5.36, or 0.5%, to 1,044.68, having risen 0.1% last week.

Investors were unhappy with the Conference Board’s report that its Index of Leading Economic Indicators, a key forecasting gauge, declined by 0.2% in September to 113.0, slightly below analysts’ expectations. The dip marked the first decline in the index since March, and followed a 0.4% rise in August.

The market was again closely watching third-quarter earnings reports for solid evidence the economy is improving.

Dozens of companies will report earnings later this week, including several top Dow components – AT&T, DuPont, Eastman Kodak, JP Morgan Chase, McDonalds, Microsoft and Merck & Co.

No big moves were expected in the market, said Brian Pears, head equity trader at Victory Capital Management in Cleveland.

“We all tend to bury our heads in the sand during earnings season because there’s so much data to process,” Pears said. “It takes time to extrapolate it, and to understand how it affects the market as a whole.”

Before the market opened today 3M said its profits were up nearly 22% on strong sales, increased productivity and reduced costs, beating analyst estimates.

The maker of Scotch-brand tape and Post-it Notes rose on the news.

The company’s results were gratifying to investors who have been particularly concerned about the struggling manufacturing sector.

Southwest Airlines also went up after the discount carrier’s earnings rose on strong summer travel. The company met analysts’ expectations.

Citigroup reported profits of 4.7 billion dollars for the third quarter, well above Wall Street expectations, but the numbers failed to impress investors. Shares were down at the close.

UBS analyst Glenn Schorr acknowledged that Citigroup’s profits were high, but said it was “difficult for us to be too thrilled,” when revenues were flat compared to the second quarter.

Advancing issues outnumbered decliners about 5 to 4 on the New York Stock Exchange. Volume was light with 1.16 billion shares traded, compared to 1.3 billion shares on Friday.

The Russell 2000 index, which tracks smaller company stocks, rose 0.10, or 0.02%, to close at 521.44.