Stocks Surge on Strong Earnings

Stocks finished sharply higher Monday, giving the Dow industrials their biggest gain in about a month, as solid results from blue chips McDonald’s and Procter & Gamble fed investors’ optimism for a rebound in corporate profits and the U.S. economy.

Investors, who have mostly placed concerns about the war in Iraq behind them, turned their attention to corporate America’s better-than-expected first-quarter results and resumed a buying spree that began in mid-March, traders said.

Weaker oil prices, which fell to a five-month low and soothed fears that high energy costs could crimp corporate profits, and fading worries about the deadly SARS virus also prompted investors to buy shares.

“Right now the fear of missing a rally is greater than the fear of getting caught in a decline,� said Tony Dwyer, chief market strategist at Kirlin Holdings.

The Dow Jones industrial average gained 165.26 points, or 2%, to 8,471.61, its biggest rally since April 2. All 30 Dow components ended higher, pushing the blue-chip Dow average back into the black for the year. The Standard & Poor’s 500 index rose 16.03 points, or 1.8%, to 914.84. The technology-laden Nasdaq composite index gained 27.70 points, or 1.9%, to close at 1,462.24.

Advancers trounced decliners by 3 to 1 on the New York Stock Exchange, and by 2 to 1 on Nasdaq. Trading was on the light side, however.

Investors largely shrugged off news that regulators reached final terms of a $1.4-billion settlement with 10 Wall Street banks, charged with issuing biased company research to gain investment banking business. The S&P; index of financial stocks rose 1.8%.

In New York trading, June crude oil futures fell 77 cents to $25.49 a barrel, the lowest since mid-November. Lower oil prices “are very much a positive. We are getting close to $25 a barrel, and it could even go lower. $25 is one of those magic numbers,� said David Memmott, head of listed trading at Morgan Stanley.

Worries about severe acute respiratory syndrome, which hit the market last week, also eased after the World Health Organization said outbreaks of the virus have peaked in Asia, except for China where it first emerged.

In other highlights:

* Among brokerage firms, Merrill Lynch rose 21 cents to $40.55, while Lehman Bros. gained 52 cents to $64.18. Citigroup, parent of Salomon Smith Barney, added 81 cents to $39.26, while fellow Dow component J.P. Morgan Chase rose 85 cents to $28.81.

* McDonald’s shares jumped $1.12 to $16.93 after it reported higher quarterly earnings as a strong euro lifted sales in Europe, its second-largest market, which masked overall weak demand.

* P&G;, another Dow member, rose $1.55 to $90.69. P&G; reported that quarterly profit rose 23%, boosted by favorable foreign-exchange rates and strong sales of its osteoporosis drug Actonel and Crest toothpaste.

* Among tech stocks, investors snapped up chip shares despite industry reports that showed global chip sales growth slowed in March as the industry suffers from oversupply and price pressure. Industry leader Intel gained 47 cents to $18.75. Intel, also a Dow member, helped buoy the blue-chip average. The SOX index of semiconductor stocks rose 2.5%.

* Tyson Foods, the world’s biggest meat-processing company, gained 21 cents to $9.58. The company said earlier that its second-quarter earnings rose, as a $94-million legal settlement offset flat sales and higher cattle and grain prices.

* Sysco, the top North American food service distributor, ended up 73 cents at $28.36, after it reported higher quarterly earnings and sales, partly because of troubles at rival U.S. Foodservice, which is embroiled in an accounting scandal.

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Market Roundup, C10-11