Stocks Rise on Earnings Reports

Wall Street gained modest ground Monday despite a weak showing by a key economic forecasting gauge.

In other trading, bond yields rose early in the day after Treasury Secretary John W. Snow said he expected market interest rates to rise as the economy recovers. But yields pulled back later to end little changed.

In currency trading the dollar rose against the yen after President Bush, who is visiting Asia, insisted that the United States favors a strong dollar.

On Wall Street, the Dow Jones industrial average meandered for much of the session, then rallied in the final hour to close up 56.15 points, or 0.6%, at 9,777.94. The Dow had fallen the three previous sessions.

The Nasdaq composite index gained 12.78 points, or 0.7%, to 1,925.14. The Standard & Poor’s 500 added 5.36 points, or 0.5%, to 1,044.68.

Winners topped losers by about 9 to 7 on the New York Stock Exchange.

Stocks had registered big gains early in October in anticipation of strong third-quarter corporate earnings. But as results rolled in last week some investors opted to take profits, leading to choppy trading.

On Monday an upbeat earnings report from industrial and consumer products giant 3M helped market sentiment. 3M, one of the 30 Dow stocks, rose $1.43 to $75.48.

Some investors were disappointed that the Conference Board’s index of leading economic indicators, a key forecasting measure, declined 0.2% in September. It was the first decline in the index since March.

But many analysts say that even if the economy slows in 2004, growth should still be at a decent pace, allowing corporate earnings to continue to advance.

Snow’s comments Monday about interest rates, which appeared in an interview with the Times of London, put more upward pressure on Treasury bond yields early in the session.

“Higher interest rates are an indicator of a strengthening economy,� Snow said. “I’d be frustrated and concerned if there were not some upward movement in rates.�

A Treasury spokesman later said Snow was not implying that he expected the Federal Reserve to raise its official short-term interest rate, but was commenting on general market rates.

The White House also clarified Snow’s comments, saying he was not making any kind of policy statement on rates, but was merely making an observation about the economy.

By the end of trading, the 10-year T-note yield was at 4.38%, down from 4.39% on Friday.

The dollar rose to 110.19 yen from 109.37 on Friday after a weekend meeting between President Bush and Japanese Prime Minister Junichiro Koizumi ended without major surprises. Bush reiterated that exchange rates should be determined by market forces but also restated his commitment to a “strong dollar� policy.

“I think they have partially succeeded in playing down the impression they wanted a weaker dollar,� said Greg Anderson, foreign exchange analyst at ABN Amro in Chicago.

Still, many currency traders and economists believe that the Bush administration hopes to see the dollar continue to drift lower in 2004, to make U.S. exports less expensive overseas.

In the stock market, meanwhile, many analysts say share prices may have reached at least a temporary plateau.

“People may be feeling it’s time for a rest ... to sit back and see how the market really is faring,� said Richard A. Dickson, senior market strategist at Lowry’s Research Reports in Palm Beach, Fla.

Among Monday’s highlights:

* Lexmark International shares soared $6.75 to $74 after the computer printer maker reported a 16% rise in third-quarter earnings, beating the company’s own estimates and Wall Street’s expectations.

* LaBranche plunged 83 cents to $10.32, continuing last week’s slide. The company, one of seven “specialist� trading firms on the NYSE, is one of five such firms the exchange said last week it plans to discipline for alleged trading abuses.

Another specialist firm under investigation, Van der Moolen, slid 26 cents to $8.66.

* Semiconductor stocks were mostly higher. Intel added 50 cents to $32.16, Broadcom gained 99 cents to $30.83 and PMC-Sierra jumped 84 cents to $16.48.

* In the Internet sector, EBay rebounded $1.74 to $56.60, but Priceline.com lost $1.08 to $29.37 and Amazon.com eased 10 cents to $59.59.

* Unilever slumped $3.52 to $57.25 after the consumer products giant trimmed its 2003 sales forecast, partly because of weak sales of Slim-Fast food products.

Market Roundup, C10-11