- The Washington Times - Tuesday, January 25, 2005

NEW YORK (AP) — A raft of strong earnings reports buoyed investors’ lagging confidence and sent stocks sharply higher yesterday, with the Dow Jones Industrial Average turning in its best showing of the year.

A strong consumer confidence reading also helped boost stocks. The Conference Board’s consumer confidence index for January came in at 103.4, up from December’s reading of 102.7 and better than the 101.3 analysts expected.

Wall Street bellwether Merrill Lynch & Co. Inc. posted a record year, while U.S. Steel Corp. swung to a profit. And despite slumping profits at drug makers Johnson & Johnson and Merck & Co., their earnings met or surpassed analysts’ forecasts, showing resiliency in the embattled pharmaceutical sector.

“I’m not sure there’s any one particular thing we can point to here. We’re getting deep into earnings season, and these companies are showing growth in bottom-line results,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “We’ve had a one-third correction from the November and December rally, and investors are coming back in now to buy on the dip.”

However, the market’s gains were somewhat deceptive. Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange, and advancers outpaced decliners by only 8 to 7 on the Nasdaq Stock Market — signs that investors are picking their stocks very carefully and are quick to sell underperformers.

The Dow rose 92.95, or 0.9 percent, to 10,461.56. The Dow had risen more than 141 points earlier in the session before losing ground, but still posted its best one-day jump since Dec. 21.

Broader stock indicators saw more modest gains. The Standard & Poor’s 500 Index was up 4.66, or 0.4 percent, at 1,168.41, and the Nasdaq Composite Index climbed 11.25, or 0.56 percent, to 2,019.95.

The plethora of earnings reports helped investors overcome ongoing fears about the upcoming Iraqi elections and oil prices that continued to climb toward $50 per barrel. A barrel of light crude was quoted at $49.64, up 83 cents, on the New York Mercantile Exchange.

“The National Association of Realtors reported that pre-existing home sales fell in December to a seasonally adjusted annual rate of 6.69 million units, slightly less than the 6.8 million economists had forecast. For all of 2004, sales rose 9.4 percent to a new high of 6.68 million units, with low interest rates credited for the jump in sales.

Despite one-time charges that sent profits falling 34 percent, Johnson & Johnson’s revenue rose 13 percent for the quarter, and the health care products giant surpassed Wall Street estimates by 3 cents per share without the charges. Johnson & Johnson rose $2.23 to $63.72.

Merck added $1.10 to $30.95 after posting earnings that matched analysts’ forecasts of 50 cents per share. Profits fell 21 percent because of lost sales and a legal reserve connected to Vioxx, the arthritis drug that was pulled from the market on Sept. 30 because of increased risks of heart attack and stroke. The company, nonetheless, managed a 2 percent increase in revenue for the quarter, better than Wall Street expected.

Merrill Lynch saw its quarterly profit slip 2 percent for the quarter, but said the results helped the brokerage to a record profit for the year. Merrill Lynch, which surpassed Wall Street profit forecasts by 9 cents per share, rose $1.19 to $57.99.

Chemical maker DuPont Co. was up 57 cents at $46.58. The company reported declining sales and profits, but after one-time charges, the Dow component beat estimates by 4 cents per share.

Ford Motor Co. warned that income from its financial-services division would slip in 2005 and said its first-quarter earnings would fall well below current Wall Street forecasts. Ford, nonetheless, gained 16 cents to $13.23

Pharmaceutical services provider AmerisourceBergen Corp. lost $1.05 to $56.52 after seeing its profits fall 41 percent for the fourth quarter and missing analysts’ estimates by 3 cents per share.

U.S. Steel swung to a profit for the fourth quarter, compared with a year ago, as the global steel market improved and the company implemented cost-cutting measures. The company beat Wall Street forecasts by 84 cents per share. U.S. Steel climbed 79 cents to $51.16

Preliminary consolidated volume on the New York Stock Exchange yesterday came to 2.03 billion shares, compared with 1.89 billion on Monday.

The Russell 2000 index of smaller companies was up 1.97, or 0.33 percent, at 606.50.

Overseas, Japan’s Nikkei stock average fell 0.11 percent. In Europe, Britain’s FTSE 100 closed up 0.64 percent, France’s CAC-40 gained 0.87 percent for the session, and Germany’s DAX index rose 0.76 percent.

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