Strong Earnings Reports Give Markets A Boost
Stocks rallied Tuesday as IBM, Microsoft, Citicorp and Chase Manhattan helped make last week’s profit worries and the resulting market sell-off a distant memory.
The Dow Jones industrial average rose 139.00 to 8,060.44. Combined with Monday’s 74-point gain, that was more than enough to wipe out last week’s 200-point downturn.
Broader indicators also repaired all or most of the remaining damage from last week’s drop, putting several back within striking distance of record territory.
Late Monday’s better-than-expected earnings reports by IBM and Microsoft quickly counteracted the disappointment over last week’s unimpressive profit showings by computer-industry leaders such as Intel, Seagate Technology and Sun Microsystems.
“Last night’s reports helped people get through the fear that maybe there’s something wrong in technology. Demand is very strong,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.
Advancing issues outnumbered decliners by more than a 2-to-1 margin on the New York Stock Exchange, where volume totaled a heavy 581.79 million shares as of 4 p.m., up sharply from Monday’s sluggish pace.
Some of the stocks that moved substantially or traded heavily Tuesday:
NYSE
IBM, up 7-11/16 at 105-3/16.
The computer industry bellwether reported late Monday that its third-quarter profits rose nearly 6 percent, exceeding forecasts by a small margin.
Citicorp, up 5-5/16 at 144-3/16.
The bank beat third-quarter profit forecasts and announced plans to cut 7,500 jobs over the next 12-18 months. Costs of the restructuring were reflected in an $889 million charge against earnings, which fell 45 percent as a result.
Lucent Technologies, up 1/4 at 86-1/16.
The telecommunications company reported a $597 million loss for the July-September quarter. Excluding one-time charges from its purchase of Octel Communications, Lucent earned a higher-than-expected $369 million.
NASDAQ
Microsoft, up 6 at 138-1/2.
The software giant narrowly beat profit expectations for the July-September quarter. Microsoft reported late Monday that its first-quarter profit rose about 8 percent, held down by a write-off for an investment in WebTV.
Citrix Systems, up 14-1/4 at 74-5/8.
The software company reported a third-quarter profit of $13 million, nearly 2-1/2 times its year-ago levels and well above Wall Street forecasts.
Barrett Business Services, down 3-3/4 at 12-5/8.
The provider of employer services and temporary personnel warned late Monday that it won’t meet expectations for its third-quarter results.