Updated from 4:04 p.m. EDT
Stocks soared Tuesday as buyers pounced on equities after seeing rosy forecasts from two chip companies and solid earnings from banks, manufacturers and telecom providers.
Dow Jones Industrial Average closed up 208 points, or 2.1%, at 10,301. The
Nasdaq gained 61 points, or 3.5%, to 1815, and the
S&P 500 rose 26 points, or 2.3%, to 1128.
Quarterly earnings were dominating the news, and several members of the Dow 30 posted their results, including
, the world's largest automobile manufacturer.
The company issued a strong first-quarter earnings report, saying profits rose 146%. The Detroit-based automaker posted earnings, excluding one-time items and its
business, of $791 million, or $1.39 a share, up from $321 million, or 57 cents a share, in the same period last year. The stock responded accordingly, rising 4.8% to $64.05.
Another Dow component in the headlines was consumer product and drugmaker
Johnson & Johnson
which turned in a good performance in the first quarter as well, citing strong sales of medical devices and its key prescription drugs. J&J traded up 1.8% at $63.26.
Soft drink giant
posted first-quarter earnings of 40 cents a share, 2 cents ahead of analysts' forecasts, and the company reaffirmed its guidance for 2002. After the implementation of a new accounting standard and one-time items, Coke had a loss of $125 million, or 5 cents a share. Shares of Coke ended the session higher by 2.8% at $53.88.
Construction equipment maker
bucked the trend of strong Dow profits, as first-quarter earnings came in a penny shy of the consensus because of weak demand caused by a slowdown in mining, construction and electric power generation. Caterpillar traded down 2.3% to close at $56.65
Many of the nation's biggest banks are reporting their results this week, and Tuesday
, among others, released its numbers. The company posted a first-quarter profit of 70 cents a share, matching analysts' expectations, but a penny shy of the year-ago earnings. Revenue for the quarter fell 4%. Separately, the company set plans to sell its investment-banking unit, Robertson Stephens, citing weak market conditions and the volatile nature of the business. Shares of Fleet climbed 8.1% at $36.18.
Elsewhere in the banking industry,
reported a 27% increase in first-quarter earnings, citing strong revenue and deposit growth, along with improving balance sheet trends. The company said it earned $390 million, or 66 cents a share, compared with $306.2 million, or 52 cents a share, a year ago. The results were in line with the consensus estimate. Fifth Third ticked down 5 cents.
Most sectors moved higher. The Philadelphia Stock Exchange Semiconductor Index rose 5.6%, the Dow Jones U.S. Wireless Communications Index skyrocketed 16.6%, the Amex Biotechnology Index was up 1%, and the Philadelphia Stock Exchange/KBW Bank Index was ahead by 2.8%. The computer hardware and software sectors, utilities, telecom stocks and Internet issues were all posting gains.
A notable exception was the homebuilding sector, many of whose members traded lower on the heels of a weaker than expected report on new home construction. March
housing starts fell 7.8%, which was below economists' expectations, but the number of privately owned housing units started is still at a historically high level. The Philadelphia Stock Exchange Gold & Silver Index was also under pressure, losing 1%.
Optimism about corporate earnings started building after the close Monday, when two pieces of news coming out of the chip sector gave investors reason to be hopeful.
Mobile handset and chip equipment maker
traded higher by 5.2% after beating Wall Street's earnings estimates and indicating that chip shipments are picking up. Semiconductor-equipment maker
also expressed optimism about coming quarters, sending its shares up 5.7% to $53.46. Other chip-equipment makers, including
, were also trading higher.
Computer hardware maker
gained 1% to $86.20. Fellow tech bellwethers
were all trading higher as well.
Shares of telecommunications services firms were pacing the Nasdaq following
2002 earnings guidance. Sprint traded up more than 20%,
closed up nearly 26%,
tacked on 14.3% and
finished up 23.3%.
In other corporate news,
announced that it will cut 7,000 jobs in its GE Capital Services unit in an attempt to lower expenditures and shift more of its operations to the Web. The company's shares were rose 3.9% to $33.10.
Though earnings reports and forecasts took center stage, another piece of economic news, this one a key inflation measure, joined the housing starts report on the docket. Before the start of the trading session, the Labor Department said the consumer price index rose 0.3% in March, up from a 0.2% rise in February, and slightly lower than the consensus estimate. Economists were expecting the CPI to climb 0.4%. The core CPI, which excludes food and energy, rose 0.1% in March, also slightly below expectations.
U.S. Treasury issues were lower at 4 p.m. EST with the 10-year note down 12/32 at 97 20/32, yielding 5.19%. The 30-year bond was the weakest issue.2
Overseas markets were mostly higher as London's FTSE 100 was gaining 1.1% to 5260 and Germany's Xetra DAX was up 1.7% to 5335. Japan's Nikkei 225 rallied up 1.9% to 11,147, while the Hang Seng rose 0.6% to 10,789.