(Updated from 11:13 a.m. EDT)
Wall Street was a little unsteady on its feet at the start of the week.
Investors, mistrustful of last week's rally and anxious in anticipation of an action-packed roster of earnings reports this week, were trading cautiously. Stocks were slightly lower and volume was skimpy. But airline and some bank shares shot north after
Dow Jones Industrial Average component
Bank of America
delivered strong earnings reports this morning.
At 12:15 p.m., the Dow was up 1.4 points to 10,541. The
Nasdaq Composite Index was down 31 points to 2054, and the
S&P 500 was lower by 5.1 points to 1211.
"I think we're going to pull back from Friday's advance," said Todd Clark, head of listed trading at W.R. Hambrecht. "I didn't see the type of advance/decline action and volume I hoped to see at the end of last week. We're definitely not going to carry through on last week's rally."
Citigroup and Bank of America both beat earnings estimates despite deteriorating loan quality and sluggishness in the investment-banking business in the financial services sector. Investors couldn't help but reward them for it. Citigroup posted second-quarter earnings of 74 cents a share, beating analysts' estimates by a penny. The bank said its international consumer operation buoyed profits. Bank of America also beat Wall Street's estimates, with earnings of $1.24 a share. Analysts were expecting $1.18. Citigroup was up 2.1% to $49.89 and Bank of America rose 3.1% to $62.10. But the
Philadelphia Stock Exchange/KBW Bank Index
was lately off 0.2% after being up earlier.
Bank of New York
was down 11.5% to $43.70, however, despite reporting that second-quarter earnings rose 8% from the year-ago period to 52 cents a share. Excluding amortization, goodwill and intangibles, the company posted income of 54 cents a share. Analysts were expecting earnings of 53 cents, according to Thomson Financial/First Call.
Despite the ailing business travel market, Continental's earnings came in above expectations. The airline reported earnings of 74 cents a share, compared with estimates of 58 cents. Investors were rewarding airline and transportation stocks.
The American Stock Exchange Airline Index
was up 1.2%. The
Dow Jones Transportation Average
was rising 1.1%.
After hitting their lowest levels since mid-April last week, the major indices staged a powerful rally. For the week, the Dow closed up 2.3% -- its first weekly gain since May. The Nasdaq gained 3.9%, and the S&P 500 finished higher by 2.1%. But some market pros were unconvinced by the strength in equities. Stocks rose at the end of the week on mediocre earnings news as investors began betting -- again -- that the worst of the earnings slowdown was over. Wall Street is now expecting a recovery sometime early next year.
That theory will be tested this week, as plenty of heavy-hitters are scheduled to report. Close to a third of the Standard & Poor's 500 companies and half the Dow's 30 components are on the earnings calendar this week. There's also a full plate of economic data and
Federal Reserve Chairman Alan Greenspan's semiannual testimony before
in the middle of the week.
A couple analysts issued downbeat notes on the battered tech sector this morning, but investors were barely taking note. Wit Soundview dropped its performance estimates for
. Additionally, Morgan Stanley Dean Witter lowered its forecast on Cisco for the fourth quarter and 2002, saying it believes the company could see quarter-over-quarter revenue declines of 3% to 14%. Cisco was lately falling 4.9% to $17.84. Dell was off 1.7% to $27.47, and Compaq was up 0.5% to $15.29.
Shares of contract electronics manufacturer
were suffering the acquisition blues. After the company said it plans to acquire
for about $4.5 billion in stock, Sanmina was falling 9.7% to $20. SCI Systems was up 6.2% to $26.74.
remains on Wall Street's radar today. The stock lately was off 9.2% to $42.53 after the
Food and Drug Administration
said Friday that it wants more data before ruling on the company's application for its new painkiller, parecoxib sodium. The company said it would supply the FDA with extra clinical data within 12 to 18 months.
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