Markets & Finance

Stocks Finish Slightly Higher


Stocks finished with small gains Monday as outlooks from several tech companies, including PeopleSoft (PSFT), buoyed hopes for a strong third-quarter earnings season.

Positive economic and earnings news has driven a generally upbeat tone in recent months. Monday was no exception.

The Dow Jones industrial average finished up 22.67 points, or 0.24%, to 9,594.98. The broader Standard & Poor's 500 index rose 4.5 points, or 0.44%, to 1,034.35. The tech-heavy Nasdaq composite index gained 12.89 points, or 0.69%, to 1,893.46.

Tuesday marks the beginning of the third-quarter earnings season, with reports from PepsiCo (PEP) and Alcoa (AA). Analysts expect PepsiCo to report earnings per share of 62 cents, up from 55 cents a year ago. Wall Street sees third-quarter EPS for Alcoa rising from 26 cents a year ago to 30 cents.

Coming Wednesday will be earnings reports from Yahoo! (YHOO), Costco (CSCO), and Genentech (DNA). Abbott Laboratories (ABT) and Juniper Networks (JNPR) are set to release results on Thursday, followed by General Electric (GE) Friday.

This week will be a relatively quiet one for earnings news given the onslaught that is set to begin next week, says Chuck Hill, chief financial analyst at First Call/Thomson Financial. There wasn't much news Monday with the Yom Kippur holiday, while economic reports and investment meetings are few this week.

"Most of the information sources this week will be pre-announcements along with the retail same-store sales reports," Hill says.

Monthly retail sales data are due Thursday. Meanwhile, there's not much on the economic calendar until the inventory figures on Wednesday. Weekly jobless claims data arrive on Thursday, before Friday's producer price index and trade data come out.

Among tech stocks in the news Monday, SAP (SAP) rose after a Merrill Lynch analyst upgraded the stock to "buy," citing confidence in its ability to achieve third-quarter license sales expectations and improved business climates in the U.S. and Germany.

Chip and handset maker Motorola (MOT), jumped after announcing plans to spin off its semiconductor business as a publicly traded company.

PeopleSoft said third-quarter earnings and revenues will top earlier forecasts amid strong demand for its products. Analysts had been expecting around $590 million in revenues for the quarter.

Wireless telephone company Nextel Communications (NXTL) announced that it would offer customers free minutes as part of a settlement of a class-action lawsuit filed in 22 states over a new fee.

Regional drugstore chain Duane Reade (DRD) cut its third-quarter and full-year profit forecast, as slower-than-expected growth in prescription sales and the August power blackout hurt its prospects. It said third-quarter sales of $338.6 million were $11.4 million below its expectations issued at the end of the second quarter.

Treasury Markets

Treasuries rose in price Monday amid little on the data front to move investors. Volumes were light due to the Yom Kippur holiday, and the muted corrective tone could last for a while -- especially with the thin data calendar, says economic research outfit MMS International. Investors will weigh speeches by Federal Reserve officials later in the week, and new supplies of government debt, with auctions for 5-year Treasury notes and 10-year TIPS scheduled.

World Markets

European stock markets finished lower. Gains in oil majors amid fresh highs in crude oil prices offset losses in shares of chemical companies on worries over rising raw material costs. London's Financial Times-Stock Exchange 100 index fell 3.90 points, or 0.09%, to 4,270.10.

In Paris, the CAC 40 was down 15.00 points, or 0.46%, to 3,281.36. Germany's DAX index stumbled 14.09 points, or 0.41%, to 3,404.91.

Asian markets finished higher Monday. In Japan, the Nikkei 225 index gained 30.85 points, or 0.29%, to 10,740.14, following an upgrade of banking stocks by Morgan Stanley. Auto and tech companies rose on the coatails of U.S. gains Friday.

In Hong Kong, the Hang Seng index rose 125.76 points, or 1.08%, to 11,734.48.


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