- The Washington Times - Tuesday, October 14, 2003

NEW YORK (AP) — Stocks struggled higher yesterday, lifting the Dow Jones Industrial Average within striking distance of 10,000 for the first time since May 2002, as a strong start to earnings season eased worries that the market’s rally has been overly optimistic.

Nasdaq stocks pushed to their highest levels in 20 months as investors anxiously awaited a third-quarter profit report from Intel Corp., which topped most analysts’ forecasts after the close of trading.

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The Dow rose 48.60, or 0.5 percent, to 9,812.98, the first close above 9,800 since May 31, 2002. Broader stock measures also rose.

Johnson & Johnson led the Dow’s advance, rising $1.14 to $50.93 after the drug and medical-products maker posted a 20 percent improvement in third-quarter profits, beating most analysts’ estimates. Other big names that topped expectations for the just-ended quarter included Merrill Lynch and Bank of America.

The market hung lower for much of the session, an expected pause after the strong gains of recent weeks, but turned moderately higher by midafternoon.

Investors appear to have fallen into two camps lately. One argues that prices already take into account a strong third-quarter showing and are unlikely to go much higher. But another faction contends that a validation of third-quarter forecasts will boost expectations for the current quarter and 2004, fueling further market gains.

“We rallied into earnings season … so you walked in having already built-in great expectations,” said Bryan Piskorowski, market analyst at Wachovia Securities. To extend the rally, “you pretty much have to hit every metric this quarter,” he said.

Yesterday’s reports, at least, offered an encouraging start.

Merrill Lynch & Co. Inc. reported a 50 percent increase in third-quarter earnings. Although the results topped most analyst forecasts, Merrill’s stock fell 82 cents to $58.07 after rising $8 so far this month.

“Merrill was the number that everybody latched onto today,” said Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston.

Intel rose 28 cents to $31.08 in advance of its quarterly report. After the close, the world’s largest semiconductor company reported that third-quarter profits doubled to $1.7 billion amid strong demand for personal computers. The results beat Wall Street expectations by 2 cents a share, and Intel was up 62 cents a share in extended trading.

Among major market measures, the Standard & Poor’s 500 index rose 4.13, or 0.4 percent, to 1,049.48. Like the Dow, the S&P; 500 finished at its highest level since May 2002.

The Nasdaq Composite Index rose 9.66, or 0.5 percent, to 1,943.19, its best finish since Jan. 28, 2002. The Nasdaq last closed above 2,000 earlier that same month.

Advancing issues outnumbered decliners by a 4-to-3 ratio on the New York Stock Exchange, where consolidated volume came to 1.62 billion shares, up from 1.34 billion in Monday’s light holiday session.

The Russell 2000 Index of small-company shares rose 4.27, or 0.8 percent, to 531.84.

In other earnings news, Bank of America Corp. rose 72 cents to $82.46 after posting strong results, and Delta Air Lines Inc. fell 98 cents to $13.74 after posting a smaller-than-expected loss of $168 million.

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