Updated from 4:06 p.m. EDT
Stocks broke out of their slump Wednesday after three
-- released positive earnings forecasts.
The Dow Jones Industrial Average closed up 157 points, or 2.1%, at 7840, while the
gained 40 points, or 3.4%, to 1222. The
added 20 points, or 2.4%, to 839.
Treasuries were having a rare down day, falling on stocks' relative strength, with the price of the 10-year note down 28/32 to yield 105 5/32%.
GE helped set a positive tone by saying its third-quarter results should be in line with estimates. Analysts are currently expecting the company to earn 41 cents a share, according to First Call. The shares rose 5% to $27 on the New York Stock Exchange
United Technologies raised its outlook for 2002, saying it expects to post a net profit of $4.40 a share, a penny ahead of analysts' expectations. Shares tacked on 3% to finish at $57.64. And International Paper affirmed its earnings forecast, sending its shares up 4.4% to $33.33.
However, another big conglomerate lowered its guidance.
reportedly dropped its fourth-quarter earnings estimate to 30 to 33 cents a share from prior guidance of 45 to 47 cents, citing a new tax rate and weak electronics market. Revenues are now expected to be unchanged, instead of up 1.3%.
The lowered guidance follows a report Tuesday that the company booked a money-losing transaction at a profit 15 months ago, and then used the alleged gain to justify more than $20 million in executive bonuses, most of them to former Chief Executive Dennis Kozlowski. The deal in question is Tyco's acquisition of Flag Telecom, a seemingly money-losing transaction upon which Tyco nevertheless claimed an $80 million gain, according to the
New York Times
. Kozlowski is currently awaiting a bail hearing after being indicted on larceny and corruption charges. Despite all the bad news, Tyco's shares jumped 10.4% to $15.
In the software industry,
was turning heads, as its stock soared 16.9% to $16.09 after its finance chief, Ken Lonchar, said it is on pace to meet its third-quarter financial targets.
Also contributing to a positive tone were optimistic words from billionaire investor Warren Buffett. Buffett, chairman of investment holding firm
, said in an interview with
Wednesday that he remains bullish on U.S. equities despite their miserable performance of late. Buffett admitted that stocks are out of sync with the economy, but doesn't believe that Wall Street is in dire straits, stressing his long-term outlook on the market and the economy. "I find nothing frightening about
the market at all," he said. "If I own a good business, I don't really care whether the markets open tomorrow."
existing home sales fell to a seasonally adjusted annual rate of 5.28 million from a revised 5.37 million in July, the National Association of Realtors said. The data were initially weighing on the homebuilding sector and the broader market, but the sell pressure dissipated.
will sell 54 million shares in a secondary offering to raise $1 billion this week. The money will be used to pay off debt. The deal is a mixed blessing for shareholders: It dilutes their existing ownership stake, but at least indicates the company's access to capital remains viable.
On the research front, Goldman Sachs cut its 2002 and 2003 estimates on
, citing continued weakness in the information-technology sector.
Analysts at Morgan Stanley raised their investment rating on drugmaker
to overweight from equal-weight after the company received a recommendation for approval from a Food and Drug Administration advisory panel for its new cancer drug, Iressa. AstraZeneca shares fell 1.7% to $30.11.
Among individual sectors, networking, semiconductors and biotech exhibited the most strength, while tobacco and gold were weaker. The AMEX Networking Index rose 3.1%, the Biotech Index gained 6% and the Philadelphia Semiconductor rose 6.7%. Market breadth was positive, as advancers outpaced decliners 8 to 3 on the NYSE and 7 to 3 on the Nasdaq, with more than 1.4 billion shares changing hands on each of the two exchanges.
AOL Time Warner
was in the headlines again, amid reports that three executives with online real-estate company
will plead guilty to fraud charges and cooperate with inquiries into their own firm and a "major media company" that is widely believed to be AOL. AOL shares slipped 1.2% to $11.85.
In London, the FTSE rose 0.7% to 3696, while in Germany the Xetra DAX added 2.2% to 2837. In Asia, Japan's Nikkei fell 1.7% to 9165, while Hong Kong's Hang Seng lost 0.8% to 9125.