US stocks soar

A raft of strong earnings reports buoyed investors’ lagging confidence and sent US stocks sharply higher today, with the Dow Jones industrial average turning in its best showing of the year.

A raft of strong earnings reports buoyed investors’ lagging confidence and sent US stocks sharply higher today, with the Dow Jones industrial average turning in its best showing of the year.

Wall Street bellwether Merrill Lynch posted a record year, while US Steel swung to a profit. And despite slumping profits at drug makers Johnson & Johnson and Merck, their earnings met or surpassed analysts’ forecasts, showing resiliency in the embattled pharmaceutical sector.

“I’m not sure there’s any one particular thing we can point to here. We’re getting deep into earnings season, and these companies are showing growth in bottom line results,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “We’ve had a one-third correction from the November and December rally, and investors are coming back in now to buy on the dip.”

However, the market’s gains were somewhat deceptive. Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange and advancers outpaced decliners by only 8 to 7 on the Nasdaq Stock Market – signs that investors are picking their stocks very carefully and are quick to sell underperfomers.

The Dow rose 92.95, or 0.9%, to 10,461.56.

The Dow had risen more than 141 points earlier in the session before losing ground, but still posted its best one-day jump since December 21.

Broader stock indicators saw more modest gains. The Standard & Poor’s 500 index was up 4.66, or 0.4%, at 1,168.41, and the Nasdaq composite index climbed 11.25, or 0.56%, to 2,019.95.

The plethora of earnings reports helped investors overcome ongoing fears about the forthcoming Iraqi elections and oil prices that continued to climb toward 50 per barrel. A barrel of light crude was quoted at 49.64, up 83 cents, on the New York Mercantile Exchange.

A strong consumer confidence reading also helped boost stocks. The Conference Board’s consumer confidence index for January came in at 103.4, up from December’s reading of 102.7 and better than the 101.3 analysts expected.

“I think the market definitely responded to the consumer confidence figures,” said Stuart Freeman, chief equity strategist for AG Edwards & Sons. “Investors are thinking, well, the consumer still feels good, so spending on part of the consumer can continue, and that certainly drives the economy.”

The National Association of Realtors reported that pre-existing home sales fell in December to a seasonally adjusted annual rate of 6.69 million units, slightly less than the 6.8 million economists had forecast.

For all of 2004, sales rose 9.4% to an all-time high of 6.68 million units, with historically low interest rates credited for the jump in sales.

Despite one-time charges that sent profits falling 34%, Johnson & Johnson’s revenues rose 13% for the quarter, and the healthcare products giant surpassed Wall Street estimates by 3 cents per share without the charges. Johnson & Johnson rose 2.23 to 63.72.

Merck added 1.10 to 30.95 after posting earnings that matched analysts’ forecasts of 50 cents per share. Profits fell 21% due to lost sales and a legal reserve connected to Vioxx, the arthritis drug pulled from the market on September 30 due to increased risks of heart attack and stroke.

The company nonetheless managed a 2% increase in revenue for the quarter, better than Wall Street expected.

Merrill Lynch saw its quarterly profit slip 2% for the quarter, but said the results helped the brokerage to a record profit for the year. Merrill Lynch, which surpassed Wall Street profit forecasts by 9 cents per share, rose 1.19 to 57.99.

Chemical maker DuPont was up 57 cents at 46.58. The company reported declining sales and profits, but after one-time charges, the Dow component beat estimates by 4 cents per share.

Ford Motor Co warned that income from its financial services division would slip in 2005, and said its first-quarter earnings would fall well below current Wall Street forecasts. Ford nonetheless gained 16 cents to 13.23

Volume on the New York Stock Exchange was moderate, although heavier than on Monday.

The Russell 2000 index of smaller companies was up 1.97, or 0.33%, at 606.50.

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