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The early rally in stocks continued to muscle higher, fueled by a strong round of earnings reports and some positive guidance going forward from a wide spectrum of companies.

Consumer products firm



, energy powerhouse



, diversified manufacturing and service company

Tyco International


and contract electronics company



weighed in with strong results.

Traders were skeptical, however, that the rally could sustain itself because earnings season is far from over - and could still yield some surprises. The looming presidential election could also bring uncertainty to the market.

The major stock market indices have been unable to sustain any rallies since the beginning of September, when the first of a

series of warnings about corporate earnings struck. But so far, investors haven't given back the gains won in last week's mid-week turnaround.

The blue-chip stocks in the

Dow Jones Industrial Average were strong all around this morning, but brokerage giant

J.P. Morgan


was the index's darling. Morgan, up 5.1%, was rising on a wave of buying in the financial sector this morning.

Online broker



was one of positive earnings reports this morning. The company reported a small quarterly profit -- compared with a year-ago loss -- fueled by trading activity that doubled on the year.

There were some disappointments this morning, however. Drug stocks and semiconductor companies were getting pinched by some bad earnings news out of those areas. Longtime pharmaceutical darling



raised its

earnings forecasts for this year by a penny, but lowered its revenue forecasts.

Schering Plough


reported that its earnings came out in-line, but the company also warned of sales weakness. Pfizer was off 6.3% in early trading, while Schering was off 0.7%.

The drug sector, which has been strong all year, rallied higher again yesterday after



beat earnings estimates and was upgraded by several analysts. Merck, another drug giant, was still in positive territory this morning, up 0.1% to $84.81.

In the semiconductor sector, investors were pointing a finger at

National Semiconductor


, which warned of a possible shortfall in the next two quarters because of "inventory corrections" by some of its customers in the mobile phone market. National Semiconductor was lately down 33.5%. Some traders were worrying that this company could hurt the tech heavy

Nasdaq out later in the day. Semiconductors helped to lead the rally late last week because semiconductors (commonly called chips) are used to make personal computers and cell phones. Investors have been concerned about slowing demand for chips, PCs and handsets this quarter.

Meanwhile, a couple of long-suffering companies are taking measures to put the pieces back together again, but investors have mixed feelings about cheering their efforts.



was up 3.2% on reports it plans to spin off its cable-television unit and wireless business into separate companies over the next one to two years.

The New York Times

reported this morning that the telecom's board had approved the plan. Shares of AT&T, the largest long-distance and cable TV company in the U. S., have been limping lower since hitting their all-time high in late March. The value of the company has now been cut almost in half.

wrote a separate story about the

spinoff plans.

But beleaguered copy giant



wasn't getting much mercy from investors. Xerox reported an operating loss for the third quarter that was below already lowered forecasts. The company also unveiled plans to sell assets and cut costs.

wrote a story about

Xerox's efforts. The document company was gaining 2% soon after the stock started trading this morning, but was lately down 2.7%.

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Sector Watch


Philadelphia Stock Exchange Semiconductor Index

was down 4.1% on weak earnings from National Semiconductor. Semiconductor titan



wasn't taking a hit. But other semiconductor stocks, such as

LSI Logic



Advanced Micro Devices



Applied Materials


were all lower, off 7.2%, 4.6% and 5.2%, respectively.

The energy companies were selling despite great earnings from oil companies reporting their earnings today.



was off 0.6% -- even though it beat analyst estimates -- due to surging strength in oil and natural gas prices.



was also down, lower by 0.2% after more than doubling analyst estimates.

The No.1 U.S. oil company, ExxonMobile, which beat expectations and nearly doubled profits, was off 0.9%.

wrote a

separate story on the oil companies' earings.

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After three days of gains, the bond market pulled back this morning. Investors are less motivated to move to safe investments because recent unrest in the Middle Eastern seems to be easing.

The benchmark 10-year

Treasury note was down 14/32 at 100 23/32, and yielding 5.654%.

The 30-year

Treasury bond was at 107 15/32, 18/32 lower, to yield 5.723%.


BTM Weekly U.S. Retail Chain Store Sales Index


definition |

chart ) fell 0.2% in the week ending Oct. 21 after a 0.5% rise in the previous period..

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