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Stocks muster gains

Market closes higher after a volatile session on tech gains as investors digest mixed earnings.

By Alexandra Twin, CNN/Money Staff Writer

July 23, 2003: 5:44 PM EDT

NEW YORK (CNN/Money) - U.S. stocks managed a higher close Wednesday, led by gains in technology, as investors weighed mixed corporate earnings and forecasts then decided to accentuate the positive, focusing on Amazon.com and Eastman Kodak.

The Nasdaq composite (up 13.08 to 1719.18, Charts) added about 0.75 percent, according to preliminary reports, while the Dow Jones industrial average (up 35.79 to 9194.24, Charts) added about 0.4 percent and the Standard & Poor's 500 (up 0.50 to 988.61, Charts) index, the session's worst performer, closed nearly unchanged. All three had struggled throughout the session.

Solid earnings news and forecasts from Amazon.com and leading biotech Amgen cheered investors eagerly waiting for corporate profits to start matching the optimism displayed by the four-months-plus stock rally. But the weak quarterly performance of Sun Microsystems and lingering concerns about CNN/Money parent AOL Time Warner posed a challenge to that optimism.

Almost two-thirds of reported earnings so far have been better than expected and while this supports hopes for a second-half recovery, it has not necessarily translated to substantial stock gains, particularly after the four-month rally.

"The forecasts for the second-half of the year for the most part seem to support a recovery, but to some extent, that's already priced into the market, so you're not seeing that much stock reaction," said Douglas Altabef, managing director at Matrix Asset Advisors. "There's not a lot of conviction and some people will take profits. But I think there will continue to be a moderately upwards bias for the remainder of the year."

Dow companies AT&T (T: down $0.29 to $19.53, Research, Estimates), International Paper (IP: down $0.04 to $38.58, Research, Estimates) and SBC Communications (SBC: up $0.20 to $23.97, Research, Estimates) are due to report results before trading begins Thursday. AT&T is forecast to have earned 53 cents per share, up from 35 cents a year earlier; IP is expected to have earned 17 cents per share, down from 35 cents a year earlier; while SBC Communications is expected to have earned 41 cents per share, down from 61 cents a year earlier.

Biogen (BGEN: up $0.71 to $41.18, Research, Estimates), Bristol-Myers Squibb (BMY: down $0.39 to $25.87, Research, Estimates), Daimler Chrysler (DCX: up $0.25 to $34.70, Research, Estimates) and Eli Lilly (LLY: up $0.18 to $66.07, Research, Estimates) are also due to report before the opening bell.

The week has been light on economic news and any news that has been released has been pushed mostly to the background amid the heavy spate of earnings. The same is likely to be true of Thursday's weekly jobless claims, which are forecast to show that the number of Americans filing new claims for unemployment last week rose to 415,000 from 412,000 in the previous week.

Technology gains dominate

Amazon.com (AMZN: up $5.24 to $40.11, Research, Estimates) shares rose 15 percent, boosting the Internet stocks on the Nasdaq. The online retailer reported quarterly earnings of 10 cents a share, 4 cents better than expected and an improvement over the loss of 1 cent per share the company posted a year ago. Amazon also raised its earnings forecast for the year.

Eastman Kodak (EK: up $2.27 to $26.86, Research, Estimates) found itself some forgiving buyers by admitting it has had problems and vowing to change. The company reported a weaker profit due to sluggish demand and the impact of the war in Iraq and SARS. But the results were still better than what analysts were expecting and the company also said it would cut 6,000 jobs as a way to start trimming costs. The stock rallied 9.2 percent and was the Dow's best percentage gainer.

Amgen (AMGN: up $0.79 to $69.72, Research, Estimates) gained 1 percent after the company reported earnings of 49 cents per share late Tuesday, 3 cents better than expected and up from 38 cents a year earlier, due to strong sales of its anemia treatment and immunity-boosting and arthritis drugs. Amgen also raised its earnings forecast for the year.

On the downside, shares of Sun Microsystems (SUNW: down $0.92 to $3.85, Research, Estimates) tumbled 19.2 percent and topped the Nasdaq's most-active list. After the close Tuesday the server makerreported results of breakeven on a per-share basis in its fiscal fourth quarter, 2 cents less than analysts expected and down from a profit of a penny a share a year earlier. The company also reported worse-than-expected sales.

Shares of AOL Time Warner (AOL: down $1.14 to $15.71, Research, Estimates) fell 6.8 percent and topped the NYSE's most-active list after the company reported improved income and lower debt, but also said revenue from its America Online division would fall and revived concerns about the SEC investigation of its accounting.

Volume was solid, with advancers edging decliners by nearly 8 to 7 on both the Nasdaq and the New York Stock Exchange. Volume on the Nasdaq reached 1.90 billion shares and some 1.33 billion shares traded on the NYSE.

Treasury prices gained, pushing the 10-year note yield to 4.06 percent, down from 4.12 late Tuesday. The dollar fell against the yen and euro.

NYMEX light sweet crude oil futures gained 18 cents to $29.67 a barrel. COMEX gold settled at $350.70 an ounce.