US stocks rise on strong earnings

The Dow Jones industrial average reached its highest level since mid-2002 today as investors greeted strong earnings from General Electric Co and Juniper Networks Inc.

The Dow and the Standard & Poor’s 500 advanced for the seventh week in a row.

GE’s earnings helped reassure investors skittish following Intel Corp’s disappointing revenue projections earlier this week.

“The key thing here is that you’re starting to see some aggressive buying coming back into the market,” said Jim Raphalian, head of institutional trading at Charles Schwab. ”There’s more than one buyer for any stock being sold, and there are both institutional and retail buyers. And that’s because earnings are showing us that fundamentals are sound.”

The Dow Jones industrial average was up 46.66, or 0.4%, at 10,600.51, a new 52-week high. It was the index’s highest close since March 19, 2002, when it finished at 10,635.30.

The Nasdaq finished up 31.38, or 1.5%, at 2,140.46, eclipsing the previous high reached on Monday. The Standard & Poor’s 500 index closed up 7.78, or 0.7%, at 1,139.83.

For the week, the Dow was up 1.4%, the Nasdaq gained 2.6% and the S&P 500 rose 1.6%. The Nasdaq had its fourth straight up week.

GE, a Dow component, posted fourth-quarter profits 47% higher than a year ago, boosted by increased industrial demand. GE closed up 1.35 dollars at 33.35 dollars, a new 52-week high.

“These early earnings reports show signs of a broad economic recovery,” said Subodh Kumar, chief investment strategist for CIBC World Markets. “However, unlike the first through third quarters, where the markets responded strongly, the expectations of the earnings are already built into the market prices, so we’ll see more price fluctuation on individual reports.”

Home Depot Inc raised its year-end profit forecast by two cents per share, although it predicted slightly slower growth in 2004. The stock closed down 49 cents at 34.94 dollars.

International Business Machines Corp again drove the market after Smith Barney upgraded the stock and the computer giant landed a 250 million dollar contract to provide Nokia with desktop computers and ongoing services. IBM climbed 1.30 dollars to 95.32 dollars, just short of its year high.

Juniper Networks Inc. jumped 7 dollars or 31%, to close at 29.93 dollars after the network equipment maker posted strong fourth-quarter gains on Thursday, beating analysts’ estimates by two cents, and promised a rosy outlook for the year. SG Cowan Securities and Merrill Lynch upgraded the company today.

Abbott Laboratories Inc was down 1.70 dollars at 43.25 dollars after announcing its earnings. While the pharmaceutical firm met estimates for the quarter, it said first-quarter and full 2004 earnings will fall short of expectations.

Consumer confidence rose to its highest level in three years in mid-January, according to the University of Michigan’s index. In addition, businesses boosted their inventories by a modest 0.3% in November, a sign of wary confidence in the economic rebound. However, the government announced industrial production was up only 0.1% in December, well short of the 0.5% expected by Wall Street and the 1% growth posted in November.

Once again, the mixed data left Wall Street without any strong indicators to gauge the speed of the recovery, which could cause some investor nervousness in the weeks ahead.

“This has been a challenging week with these kind of economic numbers,” said Sharon Stark, chief fixed income strategist at Legg Mason. “The industrial numbers surprised us again, and if this trend continues, that could create some volatility.”

Advancing issues outnumbered decliners by a 4-to-3 ratio on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies was up 4.05, or 0.7%, at 590.41.