Stocks finished solidly higher Tuesday, as investors digested a full slate of corporate earnings reports. Gains were bolstered by short-covering, strength in the pharmaceutical and financial sectors, and President Bush's backing of another term for Federal Reserve chairman Alan Greenspan.
The Dow Jones industrial average gained 156.09 points, or 1.87%, to 8,484.99. The broader Standard & Poor's 500-stock index added 19.4 points, or 2.17%, to 911.41. The tech-laden Nasdaq composite index rose 26.99 points, or 1.89%, to 1,451.36.
Major indexes bounced into the green Tuesday mid-morning on unfounded rumors that ousted Iraqi dictator Saddam Hussein was discovered dead, according to Standard & Poor's MarketScope. Though the rumor was unsubstantiated, indexes extended gains, disregarding a mixed bag of earnings news.
Tuesday's session marked one of the quarter's biggest days for earnings reports. Among the big names announcing results, drugmakers Eli Lilly (LLY) and Pfizer (PFE) both topped Wall Street earnings per share estimates, helping boost the sector.
Telecom services giant Verizon (VZ), meanwhile, posted a lower profit, but reiterated its earnings guidance for the full year.
Aerospace manufacturer Lockheed Martin (LMT) and shipping company UPS (UPS) both reported higher quarterly profits. Discount broker Charles Schwab (SCH) announced a fall in first-quarter profit, owing to decreased trading activity among its clients.
The wireless telecom sector was pulled down by a worse-than-expected first-quarter loss at Sprint PCS (PCS). Sprint PCS is the wirless unit of Sprint (FON), which posted higher quarterly profits but a decline in revenue after Monday's close.
After the closing bell, Internet auction outfit eBay (EBAY) announced higher-than-expected first quarter EPS and revenue numbers.
Investors will receiver another full plate of earnings news Wednesday. Among large companies expected to announce: AOL Time Warner (AOL), AT&T (T), BellSouth (BLS), Eastman Kodak (EK), Boeing (BA), and Xerox (XRX).
As was the case Tuesday, no major economic data are due Wednesday. The markets keenly anticipate the latest gross domestic product update, due on Friday. Economists are projecting at a minimum a rise of 2% for the first quarter, up from the 1.4% rise previously reported.
In other corporate news Tuesday, AOL Time Warner, in an effort to reduce debt, was to sell its 50% stake in the Comedy Central cable channel to Viacom (VIA).
Pharmaceutical company Merck (MRK) said it would spin off Medco Health Solutions, a prescription and health benefits manager.
In geopolitical news, as concern over war in Iraq fades, worries about the SARS virus and its effect on business activity mount.
Prices of U.S. Treasuries were mixed Tuesday. Longer-term issues fell in price, while the two- and five-year notes held narrow price gains. MMS International notes that Treasuries squandered an early lead, barely holding on to positive territory after declining over the bulk of the session as equities regained upside momentum. Early overseas weakness in stocks and news of Fed Chairman Greenspan's medical procedure Tuesday initially helped send Treasury prices sharply higher, but a healthy prognosis on both fronts quickly removed the fear bid.
President Bush said Tuesday that he supports another four-year term for 77-year-old Greenspan. His current term expires in June, 2004.
European stock markets finished higher Tuesday. London's FTSE index was up 28.5 points, or 0.73%, to 3,917.7. In Paris, the CAC 40 index rose 15.99 points, or 0.55%, to 2,914.6. In Frankfurt, the DAX index increased 61.18 points, or 2.11%, to 2,960.96.
In Asia, Japan's Nikkei 225 index finished Tuesday's session lower by 178.62 points, or 2.24%, at 7,790.46. Meanwhile, Hong Kong's benchmark Hang Seng index lost 7.23 points, or 0.08%, to 8,571.91.