NEW YORK – Stocks rose on a late rally Tuesday after hovering near unchanged for most of the session as investors snapped up battered technology shares on expectations bellwethers like IBM and Intel would report solid results after the close.
The market, which had welcomed a handful of solid reports from companies like health-care giant Johnson & Johnson while dismissing mediocre industrial production data, was also distracted by various anthrax scares.
The blue-chip Dow Jones industrial average rose 36.61 points, or 0.39 percent, to 9,384.23, while the technology-laced Nasdaq Composite Index finished just under its high of the day, rising 25.76 points, or 1.52 percent, to 1,722.07. The benchmark Standard & Poor's 500 index rose 7.57 points, or 0.69 percent, to 1,097.55.
For the Nasdaq, it was the highest close since Sept. 7, the Friday before the Sept. 11 air attacks on the World Trade Center and Pentagon.
"Expectations are so low that any good news is going to spark a rally tomorrow," said Uri Landesman, chief investment officer at AFA Management Partners. Investors loaded up on select technology names, "either for a trade or thinking that this will be the start of a mini tech rally."
Intel said its earnings dropped 77 percent amid the global economic slowdown, but the results still met expectations. International Business Machines reported a drop in earnings but its results squeaked past Wall Street forecasts.
Analysts are forecasting the third quarter will bring the biggest drop in corporate profits in a decade as companies battle the economic downturn. Investors are crossing their fingers for any positive surprises after the Federal Reserve slashed interest rates nine times this year.
Anthrax anxiety, which now is rippling across the globe, is keeping investors on edge. In addition, Wall Street still is nervous about U.S. bombings on Afghanistan, which was in a tenth day in retaliation for the Sept. 11 attacks in New York and Washington.
"People are impressed with the resiliency of the market in the face of all that's out there -- the market appears to have gone up a mighty wall of worry," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "You are coming off a market that was extremely oversold and interest rates are very low."
Dow component United Technologies Corp. , whose products range from military aircraft to elevators, posted a 14 percent rise in profits, benefiting from a lower tax rate and higher interest income. Its stock rose 98 cents to $54.00.
Johnson & Johnson , another Dow stock, added $1.05 to $56.77. The diversified health-care giant reported a rise of 16 percent in profits.
Caterpillar Inc. , another corporate icon grouped in the 30-stock Dow index, fell 17 cents to $48.03. The world's largest maker of construction equipment's earnings fell 5 percent.
IBM slipped 15 cents to $101.85, drastically cutting losses ahead of its earnings. Wall Street house Merrill Lynch cuts its profit forecast for Big Blue ahead of its earnings.
Intel rose to 58 cents to $24.96, helping both the Dow and the Nasdaq. The Philadelphia Stock Exchange semiconductor index rose 2.44 percent.
Helping the market somewhat were remarks from Federal Reserve Bank of Richmond President Alfred Broaddus who said the Fed will do everything it can to foster an economic recovery. Broaddus added that interest rate cuts are not enough on their own to help the economy weather the challenges it faces.
Among active shares, Bank One Corp. , the No. 6 U.S. bank holding company, rallied $2.46 to $32.81. The company's profits jumped 30 percent, thanks to cost controls and a rebound at its vast credit card arm.
J.P. Morgan Chase, was up 39 cents at $33.94, and Citigroup Inc., rose $1.29 to $46.09, joining a rise in financial stocks and helped boost the Dow. The S&P financial index rose 1.87 percent.
Novellus Systems Inc., a maker of semiconductor production equipment, said its profits fell. Slower demand for electronic products hurt capital spending by its customers. It shares fell but rebounded later as tech issues rallied, and finished up 90 cents at $32.54.
Weighing on the market earlier Fidelity's Magellan fund the largest managed U.S. mutual fund, announced its total assets up to Sept. 30 shrunk to $71.6 billion, and are down 23 percent for the first nine months of the year.
Magellan said year-to-date performance was off 20.53 percent through compared with a 20.39 percent drop in the benchmark Standard & Poor's 500 index during the same period.
"I think that people are quite anxious to see what some of the earnings are going to be after the close today," said Edward Collins, executive vice president, head of U.S. equity trading at Daiwa Securities. "Then there is also anthrax news, Afghanistan news and Fidelity news,
In the latest economic news, U.S. industrial output slumped for a 12th straight month in September, dropping 1.0 percent and marking is longest slide since the end of World War II, the Federal Reserve said.
Advancing issues led decliners nearly 4 to 3 on the New York Stock Exchange. Volume came to 1.46 billion shares, compared with 1.24 billion Monday.
The Russell 2000 index gained 4.44 to 434.53.
Overseas, Japan's Nikkei stock average rose 1.8 percent. In Europe, Germany's DAX index climbed 1.7 percent, Britain's FT-SE 100 rose 0.3 percent, and France's CAC-40 gained 2.2 percent.
Reuters and the Associated Press contributed to this report.