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Stocks rise following US Steel, Amex earnings
2009-01-27
NEW YORK - Some of Wall Street's earnings anxiety is easing -- at least for the time being. The market had its second straight moderate advance Tuesday, rising after companies including United States Steel Corp. and American Express Co. managed to post profits in a difficult recession. Financial stocks that were mostly higher also lent support to the market. The major indexes briefly stumbled after the Conference Board said its Consumer Confidence Index in January slipped to its lowest level since the reading's inception in 1967. The report indicated that consumers, who have already cut back drastically, are likely to remain reluctant to spend in the coming months. The index from the private research group slipped to 37.7 in January from a revised 38.6 in December. But profit reports from U.S. Steel and American Express as well as chip-maker Texas Instruments Inc. and movie rental company Netflix Inc. reassured investors that while the fourth quarter was generally terrible for companies, it wasn't the disaster many had feared -- some companies are still able to make money despite the worst recession in decades. "Remember, things have been so ugly for so long now that it doesn't take a lot to have a positive surprise," said Jim King, chief investment officer at National Penn Investors Trust Co. in Reading, Pa. He said some companies are putting up weak results but the numbers can still look respectable when compared with a year-earlier. He expects the market's gyrations will continue as investors react to the latest corporate earnings reports and forecasts. "The volatility is not done," King said. "You're seeing a lot of varying results from corporations." Indeed, investors sold shares of Delta Air Lines Inc. and Verizon Communications Inc. after their results disappointed Wall Street. The Dow Jones industrial average rose 58.70, or 0.72 percent, to 8,174.73. Broader stock indicators also advanced. The Standard & Poor's 500 index rose 9.14, or 1.09 percent, to 845.71, and the Nasdaq composite index rose 15.44, or 1.04 percent, to 1,504.90. The Russell 2000 index of smaller companies rose 5.52, or 1.23 percent, to 455.58. Advancing issues outnumbered losers by 2 to 1 on the New York Stock Exchange, where consolidated volume came to 4.66 billion shares, down from Monday's 5.13 billion. Stocks rose moderately Monday after the National Association of Realtors said existing homes rose rather than fell in December, as had been expected. Bond prices were mixed Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.53 percent from 2.65 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.13 percent. The dollar fell against other major currencies, while gold prices also fell. Light, sweet crude $4.15 a barrel, or 9 percent, to settle at $41.58 on New York Mercantile Exchange. Weak economic data, including a sharp drop in the Standard & Poor's/Case-Shiller 20-city index of home prices, had oil traders again betting that demand for energy will fall. Wall Street, however, took a more positive approach to the day's events. Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York, said Wall Street was pleased by the U.S. Steel numbers because the results could signal that the overall economy isn't as weak as some investors believed. Demand for raw materials like steel is seen as an early indicator of economic activity. U.S. Steel, the largest U.S.-based steel producer, said its fourth-quarter earnings jumped as an acquisition boosted results. The stock rose $2.03, or 6.9 percent, to $31.49. American Express rose $1.48 or 9.7 percent, to $16.68 after reporting its profits fell 79 percent in the final three months of 2008. The numbers weren't as weak as some investors had feared. Texas Instruments said its earnings fell 86 percent and that it would slash 3,400 jobs as the maker of chips for cell phones and other products tries to cut costs. Wall Street applauded the move, sending the stock up 54 cents, or 3.6 percent, to $15.31. And Netflix jumped $4.67, or 15.5 percent, to $34.82 after reporting its fourth-quarter profit surged 45 percent on strong subscriber growth. Thomas Nyheim, portfolio manager at Christiana Bank & Trust Co. in Greenville, Del., said investors are pleased to see earnings from companies outside the troubled banking industry. Their reports dominated the first weeks of the flood of corporate results. Now, a range of industries are turning in results. "They're poor and all the guidance is poor but at least they're having an earnings number, at least they're not missing by a wide margin," he said. Financial companies rose as Wall Street was relieved that the bulk of the industry's quarterly reports are complete. The results were terrible but traders mostly look past current news and place bets on what's to come in the next three to nine months. Bank of America rose 50 cents, or 8.3 percent, to $6.50, while Goldman Sachs Group Inc. rose $4.06, or 5.5 percent, to $78.26. Delta, the world's biggest airline, said it lost $1.4 billion in the fourth quarter as it booked a massive charge related to employee stock awards. Contracts for fuel signed when prices were higher didn't allow the company to fully benefit from a huge drop in oil prices from July last year. Delta fell $2, or 20.14 percent, to $7.93. Verizon said its earnings rose 15 percent in the fourth quarter as the telecommunications company added wireless and broadband subscribers. But revenue fell short of Wall Street's forecast and investors worried about profit margins. The stock fell $1.03, or 3.3 percent, to $29.96. Overseas, Japan's Nikkei stock average jumped 4.93 percent. Britain's FTSE 100 fell 0.35 percent, Germany's DAX index lost 0.08 percent, and France's CAC-40 slipped 0.03 percent. ___ On the Net: New York Stock Exchange: http://www.nyse.com Nasdaq Stock Market: http://www.nasdaq.com
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