Updated from 4:03 p.m. EST
Stocks finished modestly higher Monday afternoon, with the
setting a new 30-month closing high as investors grew optimistic ahead of major earnings reports from the technology sector due out later in the week.
rose 26.29 points, or 0.3%, to 10,485.18; the
improved 5.37 points, or 0.5%, to 1127.23; and the Nasdaq climbed 24.86 points, or 1.2%, to 2111.78, after the three major indices sold off Friday on the heels of a weak employment report.
Volume on the
New York Stock Exchange
was 1.43 billion shares, while 2.21 billion shares changed hands on the Nasdaq. Advances beat decliners by about 3 to 2 on both exchanges.
"I think the upcoming earnings reports are encouraging investors," said Robert Basel, co-head of equity trading at Citigroup. In addition, "as investors analyze Friday's employment report from a longer-term perspective, they like what it means for the rate outlook."
Markets overseas finished lower. London's FTSE 100 was off 0.4% at 4450, while Germany's Xetra DAX was down 0.5% at 3996. In Asia, Hong Kong's Hang Seng finished down 0.3% to 13,352. Japan's Nikkei is closed for a holiday.
Meanwhile, the 10-year Treasury note fell 2/32, yielding 4.09%.
The dollar was stronger vs. the Japanese yen and the euro, which recently touched $1.2746 vs. the U.S. currency. The euro weakened after European Central Bank President Jean-Claude Trichet expressed concern over the currency's rapid appreciation.
Stocks finished well into the black Monday, showing resilience in the wake of large losses triggered by a dramatically disappointing labor report. The Dow and S&P 500 have now finished higher for the past seven consecutive weeks, barely missing a beat after a report Friday showed the U.S. economy added only 1,000 jobs in December. Although stocks did sell off on Friday, the pullback seemed mild compared to the degree of the downside miss, and the initial reaction was far from dramatic, with the Nasdaq actually trading higher for a good portion of the day.
Are the markets displaying a touch of "irrational exuberance," to borrow the term coined by
Chairman Alan Greenspan in 1996? Several strategists say no, but warn that a mild correction is possible. Still, most expect stocks to continue their march higher.
"There is no question that some stocks are priced for perfection, but the markets are still in the process of discounting a good economy and growing earnings," said Peter Cardillo, chief strategist at Global Partners Securities. "Growth in the economy should give enough impetus for the market to move higher" over the next couple of quarters.
Michelle Clayman, chief investor officer at New Amsterdam Partners, isn't concerned either. "We think at these levels, the market is probably around fair value. We are not very worried; the S&P 500 is currently trading at around 17 times 2004 earnings," which she feels is reasonable.
Both Clayman and Cardillo said there is a chance of an interim correction, but feel that any pullback would be mild. "There certainly will not be a sharp correction, barring any dramatic surprises on the economic or global front," said Clayman.
In Monday's earnings news,
reported that fourth-quarter earnings were $1.21 a share on a 7.1% rise in sales, beating estimates. The shares lost 19 cents, or 0.3%, to $70.78.
raised its fourth-quarter earnings guidance to 32 cents to 33 cents a share, up from a previous forecast of 31 cents to 32 cents a share. Analysts' consensus estimate is 32 cents a share. It also expects full-year 2003 earnings at $1.20 to $1.21 a share, which is above analysts' estimates of $1.19 a share. Shares closed off 51 cents, or 2%, to $24.99.
In research action,
was upgraded by Bear Stearns to outperform from peer perform; the broker believes the recent pullback provides a more attractive entry point, and it feels business fundamentals are set to improve. The shares gained $3.15, or 4.8%, to $68.19.
Additionally, Banc of America boosted
( GDT) to buy from neutral and raised its price target to $75 from $54; the firm is confident that clinical trials of an experimental drug will be successful. The company's stock added 65 cents, or 1%, to $64.96.
Credit Suisse First Boston downgraded
to underperform from neutral, citing its recent price run-up and diminished growth prospects due to several research failures. The stock dipped $1.23, or 2.6%, to $45.90.
was downgraded by Janney Montgomery Scott to hold from buy on the basis of valuation. Despite the move, Cisco shares climbed 55 cents, or 2.1%, to $27.03.
to underweight from neutral weight; the brokerage is concerned that the aluminum giant will miss 2004 and 2005 earnings estimates. The shares fell $1.28, or 3.4%, to $35.97
Prudential also moved on
, lifting the stock to neutral from underweight based on an attractive valuation relative to its peers. The shares improved 57 cents, or 1.4%, to $40.86.
Tomorrow, the only major items on the economic calendar are import and export prices for December.