Stocks bounce back on IBM report

NEW YORK – Wall Street advanced sharply Monday, with solid preliminary results from IBM encouraging investors to go back into the stock market after last week’s rout.

International Business Machines Corp., one of the 30 Dow Jones industrials, released preliminary earnings estimates for the fourth quarter that were 24 percent above year-earlier levels. The results also beat the forecast of analysts surveyed by Thomson Financial.

After falling nearly 250 points on Friday, the Dow rose more than 170 points Monday.

“The market was pretty oversold,” said Richard E. Cripps, chief market strategist for Stifel Nicolaus. “We were due to bounce back, and the IBM news didn’t hurt.”

IBM’s news, coming as earnings season is about the get under way in earnest, did raise some hopes that fourth-quarter results might not be as bad as feared.

Investors also moved back into financial services stocks ahead of Citigroup Inc. earnings on Tuesday and Merrill Lynch & Co.’s report on Thursday. It is expected both companies will announce further capital injections to stanch bigger-than-feared mortgage-related losses.

The Dow gained 171.85, or 1.36 percent, to 12,778.15. IBM was the biggest gainer in the Dow, rising $5.26, or 5.4 percent, to $102.93.

Broader stock indicators also rose. The Standard & Poor’s 500 index added 15.23, or 1.09 percent, to 1,416.25 and the Nasdaq composite index shot up 38.36, or 1.57 percent, to 2,478.30.

Treasurys were trending slightly higher after fluctuating. The yield on the benchmark 10-year Treasury note was 3.79 percent, down from 3.81 percent late Friday, and then fell to 3.77 percent in after-hours trading on Monday. Prices and yields trade in opposite directions.

The Russell 2000 index of smaller companies rose 7.83, or 1.11 percent, to 712.48.

Overseas, the Tokyo stock market was closed for a holiday Monday. In Europe London’s FTSE 100 rose 0.22 percent, Germany’s DAX advanced 0.18 percent and Paris’ CAC 40 gained 0.60 percent.