Stocks Run Higher After Fitful Beginning

The major indices reach session highs at midmorning as the government weighs a program to help troubled homeowners and traders size up more quarterly earnings reports.
Publish date:

Updated from 9:36 a.m. EDT

U.S. stocks were undulating Thursday, as new data showed an increase in home foreclosures and a rise in unemployment and as companies released another set of cautious

earnings statements


Recently, the major indices were near their session highs. The

Dow Jones Industrial Average

was gaining 185 points to 8704, and the

S&P 500

added 17 points to 913. The


was adding 15 points to 1631.

On Wednesday, stocks sold off steadily as many companies, citing an impending economic downturn, cautioned investors not to expect much in coming months.

The new day's economic data lent support to U.S. companies' cautious prognostications. The Department of Labor's jobless numbers for the week ended Oct. 18 unexpectedly rose by 15,000 to 478,000. Economists were expecting 468,000 unemployment claims for the week.

In addition, home foreclosures were up 71% year over year to 766,000 for the third quarter as home prices declined, according to


. Separately, the Federal Housing and Finance Agency said its home price index slipped 0.6% from July to August and fell 5.9% year over year.

As the economic outlook worsened, the government looked ready to aid homeowners. The Bush administration is mulling a $40 billion program to prevent


, according to a report in

The Wall Street Journal


News from large U.S. firms was corroborating the pessimism. The


reported that

Goldman Sachs

(GS) - Get Report

is planning on cutting its workforce by 10% as it copes with the credit crunch.

General Motors

(GM) - Get Report

announced it would also be reducing its headcount and temporarily cutting employee benefits in an effort to cut costs. Fellow automaker


said it would close a plant in Newark, Del., and eliminate a shift at a plant in Ohio as it sheds 1,800 workers.

Another day of earnings produced a mixed bag of quarterly results. In forecasting future results some companies were timid, while others showed more optimism in the face of a likely downturn.

During this week of earnings season, stocks typically trade in sectors on a single company's earnings, said Marc Pado, U.S. market strategist at Cantor Fitzgerald. He said that as additional reports roll out next week, stocks will begin trading more in line with their individual results.

Pado also said companies often strive to lower investor expectations during the third quarter so that they can end the fourth quarter on a high note. "You're seeing, across the board, all these companies are really setting the bar low."

Although the market doesn't look to spend much time below the lows achieved earlier this month, "we could very well be in for a year-long consolidation," said Pado.

Following Wednesday's close, online retailer

(AMZN) - Get Report

beat estimates, but the company lowered its forecast for the fourth quarter.

In the biotech arena,


(AMGN) - Get Report

announced solid earnings and lifted its forward guidance.

Ahead of the new session, fellow biotech firm


(CELG) - Get Report

announced a 251% increase in profit, trumping Wall Street's expectations. Pharmaceutical company

Eli Lilly

(LLY) - Get Report

swung to a loss on charges related to a government probe into its Zyprexa drug.

Among chemicals companies,

Dow Chemical

(DOW) - Get Report

said third-quarter earnings rose as sales jumped 13%. Fertilizer concern



likewise saw earnings surge in its most recent quarter.

Electronics maker


(SNE) - Get Report

slashed its fiscal 2009 outlook in half in part because a strengthening yen would hurt currency conversions from overseas sales.

Shipping concern


(UPS) - Get Report

, meanwhile, reported earnings that beat analysts' estimates but warned of challenges in coming quarters.

Cigarette maker


(MO) - Get Report

said that its profit declined 67% year over year, but on an adjusted basis the company beat estimates.

In commodities, crude oil was gaining $1.26 to $68.01 a barrel. Gold was down $16 to $719.20 an ounce.

Longer-dated U.S. Treasury securities were edging lower. The 10-year was down 6/32 to yield 3.61%, and the 30-year flat, yielding 4.06%. The dollar was strengthening vs. the euro and pound but softening against the yen.

Overseas, European exchanges such as the FTSE in London and the Dax in Frankfurt were trading lower. In

Asian markets

, Japan's Nikkei and Hong Kong's Hang Seng closed with losses.