US stocks close up

Stocks drifted higher in New York today, brushing aside another record high for oil prices amid hopes third-quarter profit reports would override worries about a struggling economic recovery.

With no major economic or earnings data to steer market sentiment on Columbus Day, investors appeared to be betting that the quarterly reporting season might divert attention from last Friday’s disappointing employment report and rising fuel costs.

However, analysts were dubious the market could build much momentum on profit news alone without some resolution to the big question marks dogging the near-term outlook.

Stocks managed to hold their modest gains even as oil futures pushed toward 54 a barrel. Contracts for next month’s shipments rose 33 cents a barrel to 53.64 on the New York Mercantile Exchange as a strike began in Nigeria, Africa’s largest exporter of crude, adding to supply concerns at a time of reduced output in the hurricane-ravaged Gulf of Mexico.

The Dow Jones industrial average rose 26.77, or 0.27%, to 10,081.97, a modest rebound following a drop of 1.35% last week.

Broader market measures also posted modest gains. The Nasdaq composite index rose 8.79, or 0.46%, to 1,928.76, at 1,928.36, while the S&P 500 index rose 2.25, or 0.20%, to 1,124.39.

The biggest movers among the Dow 30 were The Home Depot, up 1 to 40.02Altria Group, up 58 cents to 47.09, and American International Group, up 58 cents to 67.48. Drug makers also lifted the Dow, with Merck & Co rising 45 cents to 30.80 and Pfizer rising 46 cents to 30.26.

Despite a spate of worrisome earnings previews over the past month, Wall Street expects the companies in the Standard & Poor’s 500 to show at least a 10% increase in profits from a year ago, and the newly tempered outlook may enable most of the reports to top Wall Street forecasts.

But even with a strong showing, third-quarter profits are expect to come in lower than the second quarter’s results, breaking a string of six straight quarters with improving profits.

“The stall in sequential earnings growth in Q3 has been accompanied by a stall in the equity market. We doubt that this is a coincidence,” Ed Keon, chief investment strategist for Prudential Financial, said in a note to investors. “We think that growth will be hard to come by for the next several quarters. ... Without much earnings growth and with valuations still higher than historical averages (although our valuations concerns are mitigated by low inflation and interest rates), we continue to think that the equity market will struggle for a while.”

The reporting season will hit full stride tomorrow with updates from Intel, Yahoo! and Merrill Lynch. Other big names reporting later in the week included General Motors and Citigroup. In all, more than 100 companies are scheduled to report by the end of the week.

Advancing and declining issues were nearly even on the New York Stock Exchange, while decliners held a small lead on the Nasdaq Stock Market. Volume was extremely light, with many traders taking a long holiday weekend.

The Russell 2000 index of smaller companies rose 1.91, or 0.33%, to 577.56.