Stocks edge higher ahead of earnings season

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NEW YORK (AP) — Stocks edged higher Monday, erasing an early loss, as major U.S. companies prepared to start reporting first-quarter results.

Alcoa will release its results after the markets close Monday. The aluminum company will be the first member of the Dow Jones industrial average to report earnings for the quarter. Alcoa was up 6 cents at $8.30 an hour before the closing bell.

The Dow was up six points, or 0.1 percent, to 14,571, having started the day lower and fallen as much as 67 points during morning trading. The Standard & Poor’s 500 index rose five points, or 0.3 percent, to 1,558.

Telecommunications and health care stocks were the only industries to decline, down 0.7 percent and 0.4 percent, respectively.

The two industry groups have performed well this year, as investors have sought less risky stocks that pay good dividends. Health care companies are up almost 16 percent, making them the best performers in the S&P 500.

Analysts expect earnings for companies in the S&P 500 to rise by 0.7 percent from the first quarter of last year. Telecommunications and so-called consumer discretionary stocks are forecast to lead the growth, according to data from S&P Capital IQ. Consumer discretionary stocks include department store chains such as Macy’s.

While expectations for the coming reporting period are low, investors will be studying the reports to gauge the outlook for the rest of the year, said Cam Albright, a director of asset allocation at Wilmington Trust Investment Advisors.

“That’ll be a critical piece for the markets to digest,” he said.

Johnson & Johnson logged the biggest percentage decline on the 30-member Dow Jones industrial average, dropping $1.08 to $80.96. Analysts at JPMorgan cut their rating on the stock to “neutral,” saying it has risen too far, too fast. Johnson & Johnson is up 16 percent this year.

Lufkin Industries, an oilfield equipment maker, surged $24.15 to $88.07 after General Electric Co. agreed to buy the company for $3 billion. GE wants to bolster its oil and gas operations. Its stock edged 8 cents lower to $22.87.

Stocks fell Friday after the government reported a slowdown in hiring that was far worse than economists had expected. The report capped a bad week: The S&P 500 logged its biggest weekly decline of the year as signs emerged that U.S. growth is starting to cool.

In other trading, the Nasdaq composite index rose seven points, or 0.2 percent, to 3,211.

The yield on the 10-year Treasury rose to 1.73 percent, after falling as low as 1.69 percent Friday, its lowest level of the year.

The benchmark rate has fallen from a recent high of 2.06 percent on March 11 as demand for low-risk assets increases.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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