Stocks Get Earnings Lift
08/02/06 - 04:17 PM EDT
Robert Holmes
Updated from 4:04 p.m. EDT
Stocks perked up after two days of declines Wednesday as strong earnings from Procter & Gamble (PG Quote - Cramer on PG - Stock Picks) and Time Warner(TWX Quote - Cramer on TWX - Stock Picks) spurred buying. The Dow Jones Industrial Average rose 74.20 points, or 0.67%, to 11,199.93, and the S&P 500 added 7.63 points, or 0.6%, to 1278.55. The Nasdaq Composite jumped 16.82 points, or 0.82%, to 2078.81. The 10-year Treasury bond rose 3/32 in price to yield 4.96%, and the dollar rose against the yen and euro. The Dow was boosted by gains of 2.6% or more in components Hewlett-Packard(HPQ Quote - Cramer on HPQ - Stock Picks), Procter & Gamble, and AT&T(T Quote - Cramer on T - Stock Picks). The Nasdaq, meanwhile, was supported by a gain of 13.9% in software maker Adobe Systems(ADBE Quote - Cramer on ADBE - Stock Picks) after the company reaffirmed its third-quarter earnings forecast. "Investors were driven by earnings today instead of inflation fears, which gave us this move higher," said Paul Nolte, director of investments with Hinsdale Associates. "The 10-year bond has been rallying, and if inflation concerns were really in investors' minds, then we'd see it selling off. The bigger concern is the slowing economy and earnings growth." About 1.75 billion shares changed hands on the New York Stock Exchange, with advancers beating decliners by a 2-to-1 margin. Volume on the Nasdaq was 1.78 billion shares, with advancers outpacing decliners 3 to 2. "Yesterday, the market succumbed a bit more to the inflation fears, war concerns, earnings and economic vulnerabilities," said Marc Pado, market strategist with Cantor Fitzgerald. "While the door is still open through the middle of August for some further upside, the closer we get to our time target of next Tuesday's FOMC meeting, the more nervous we get." Procter & Gamble said it had fiscal fourth-quarter earnings of $1.9 billion, or 55 cents a share, up 36% from a year ago. Sales jumped 25% to $17.84 billion from last year. Analysts expected EPS of 54 cents on $17.5 billion in sales, according to Thomson First Call. P&G added $2.36, or 4.2%, to close at $58.29. Time Warner swung to a second-quarter profit of $865 million, or 20 cents a share, reversing a loss of $425 million, or 9 cents a share, last year. Results beat the Thomson First Call average estimate by a penny. Revenue rose 1.1% to $10.71 billion but missed forecasts. The media giant also announced it would make its America Online service available to broadband users for free. No impact to 2006 earnings is expected. Shares of Time Warner rose 42 cents, or 2.6%, to $16.67. Oil spiked after weekly inventory data from the government showed a decline in crude supplies of 1.8 million barrels. Gasoline stocks fell by 100,000 barrels, and distillates rose by 700,000 barrels. The report came as Tropical Storm Chris strengthened in the Caribbean. The storm is expected to become a hurricane Wednesday. In Nymex floor trading, September crude gained 90 cents to close at $75.81 a barrel. To view Gregg Greenberg's video take on today's market, click here.
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