Major indexes closed with small gains on Monday, in very narrow trading as investors settled in for another busy week of earnings news.
The blue chip Dow Jones industrial average climbed 56.2 points, or 0.57%, at 9,777.90. The broader Standard & Poor's 500 index edged up 5.36 points, or 0.51%, to 1,044.68. The tech-heavy Nasdaq composite index finished higher by 12.78 points, or 0.66%, to 1,925.14.
Wireless services, chip and managed healthcare issues were higher, along with airline stocks, after a favorable earnings report from Southwest Airlines (LUV). Food retailers moved lower as the group suffers from the ongoing grocery workers strike over health care costs in Southern California that threatens to expand. Biotech issues also slumped.
But analysts point out that the bulk of the earnings arrive later this week. One sector that will be closely watched is biotech, with industry leader Amgen (AMGN) set to report on Tuesday. Says Michael Farr, president and chief investment officer at Washington, D.C.-based investment firm Farr, Miller & Washington: "[T]here has been strength in biotech almost all year. We want to see these companies, Amgen being the largest, come in with decent earnings growth to support some of the increase in prices that we've seen. Stocks have [already] anticipated good earnings."
The Treasury budget came in with a September budget surplus of $26.4 billion, a positive end to the fiscal year 2003. Spending rose 10.0% during the month to $165.3 billion, while receipts fell a modest 0.5% to $191.6 billion. "The surplus during the month left the Treasury with a record $374.2 billion deficit for the fiscal year, a significant widening compared with the $157.8 billion in fiscal year 2002, reports economic research firm MMS International. "Although the budget data reflect erosion from last year, the red ink for the fiscal year is well below earlier estimates in the $450 billion area."
The Conference Board's index of leading economic indicators fell 0.2% in September, following a 0.4% increase in August, breaking a string of five consecutive monthly gains. Despite the weakness in September, other data suggest economic growth of about 6% on the quarter, says MMS.
Earlier in the day, better-than-expected results arrived from Citigroup (C). The financial-services giant reported third quarter earnings of 90 cents, vs. 76 cents, on a 9.9% rise in revenues to $19.4 billion. Income from continuing operations was $4.69 billion. The stock finished slightly lower.
3M (MMM) posted earnings of 83 cents per share, ahead of estimates, vs. 69 cents, on 11% higher worldwide sales. The diversified industrial concern expects fourth quarter earnings as high as 75 cents, and raised its 2003 EPS guidance to a range of $2.98 to $3.00. 3M ended the day 1.9% higher.
In technology, Check Point Software (CHKP) reported 23 cents per share, vs. 25 cents in its third quarter, as an increase in taxes, shares outstanding, and expenses offset a 2.7% revenue rise. The stock ended slightly higher.
Printer maker Lexmark (LXK) closed 10% higher, as the company beat third quarter estimates by posting earnings of 79 cents per share, vs. 70 cents on an 11% revenue rise. The company sees fourth quarter earnings as high as 95 cents, and mid-to-high single digit revenue rise. S&P reiterated its accumulate rating on the stock.
Southwest Airlines posted third quarter earnings of 13 cents per share, vs. 6 cents, exlcuding items, on 12% higher total operating revenue. Shares of the carrier finished 3.2% higher.
Pharmaceutical concern Novartis (NVS) has reportedly posted third quarter net income of $1.28 billion vs. $1.19 billion. The stock ended 1.7% higher.
Meanwhile, Pozen (POZN) received a not-approvable letter from the FDA related to its New Drug Application for MT 300, which failed to achieve statistical significance vs. a placebo for relief at two hours of secondary symptoms of migraine. Pozen shed 33%, to $11.94.
Toymaker Hasbro (HAS) posted third quarter earnings of 38 cents, vs. 32 cents on a 18% revenue rise. The stock finished 5.1% higher.
After Monday's market close, Texas Instruments (TXN), Cendant (CD), and Horizon Health (HORC) were set to report results.
There will be a steady stream of third quarter earnings reports during the remainder of the week. On Tuesday, earnings are due from Pfizer (PFE) and Occidental Petroleum (OXY).
Wednesday brings reports from McDonald's (MCD), Merck (MRK), and Electronic Data Systems (EDS); while Lucent Technologies (LU) reports its fourth quarter earnings. On Thursday, investors will hear from Microsoft (MSFT) and FirstEnergy (FE).
On the economic front, the week will be quiet. Initial claims, weekly chain store sales, and MBA figures round out the rest of the week. Several Federal Reserve officials, including Chairman Alan Greenspan on Thursday, will speak during the week.
Treasuries closed a bit higher Monday, after the White House refuted a story out of the U.K. paper London Times, indicating that U.S. Treasury Secretary John Snow would welcome higher rates. The weaker leading indicators data also supported the market.
European stocks finished higher on Monday. Germany's DAX index enjoyed the largest surge, and was higher by 42.66 points, or 1.21%, to 3,559.33 just before its close. The index pushed ahead amid reports of higher earnings and growing perception German economy might have reached a bottom.
London's Financial Times-Stock Exchange 100 index added 3.5 points, or 0.08%, to 4,347.50. Trading was restrained following a report that the U.K. budget deficit has widened. In Paris, the CAC 40 gained 5.08 points, or 0.15%, to 3,358.80.
Asian stocks finished higher. Japan's Nikkei 225 index added 123.82 points, or 1.12%, to finish at 11,161.71. In Hong Kong, the Hang Seng index increased 103.40 points, or 0.86%, to 12,147.89.