Blue Chips Gain as Investors Turn More Optimistic

Blue-chip stocks rose Friday as investors shrugged off a U.S. government warning about possible attacks against U.S. financial institutions amid a flurry of earnings report, while technology stocks finished slightly lower after zigzagging above and below the unchanged mark for most of the day.

The Dow Jones industrial average rose 51.83 points, or 0.51 percent, to 10,257.11, according to the latest data, while the broader Standard & Poor's 500 Index edged up 0.69 of a point, or 0.06 percent, to 1,125.16. The technology-laced Nasdaq Composite fell 5.68 points, or 0.32 percent, at 1,796.75.

For the week, the Dow rose 0.8 percent, the Nasdaq gained 2.3 percent, and the S&P 500 added 1.3 percent.

The FBI said early Friday afternoon it had received "unsubstantiated information" that "unspecified terrorists" are considering such attacks. But traders said the market held up after an initial knee-jerk reaction to sell stocks.

"There are concerns about an attack on the financial system," said Kevin Connellan, director of trading at Northern Trust Global Investments in Chicago, explaining why stocks gave back some gains. "But we have a tendency to overreact."

The damage was ultimately limited, much like the market on Thursday recovered from midday declines after an airplane crashed into a skyscraper in Milan, Italy. That news initially spooked investors as it conjured up memories of the Sept. 11 attacks, but the market flipped back after it became clear the crash was an accident.

Microsoft Corp. (MSFT) sent a shudder through global stock markets overnight with a cautious outlook and soft revenues, announced late on Thursday. But sentiment changed as analysts focused on its operating income, which made its results look better than they had at first glance. Microsoft, a Dow stock, rose 83 cents, or 1.5 percent, to $57.20.

More than half of the 30 corporate icons in the blue-chip Dow Jones industrial average had reported their earnings by the close on Friday. It's been a mixed bag of earnings and investors are scratching their heads.

"There's a clear indication that earnings are insufficient to provide upside momentum," said Henry Herrmann, chief investment officer at investment firm Waddell & Reed. "The market is still looking for something to take a cue from and it's yet to be revealed."

The Walt Disney Co. (DIS) was one of the Dow's biggest gainers and rose 2.25 percent or 55 cents to $24.95. Goldman Sachs upgraded it to "trading buy" from "market perform," citing a quicker-than-expected recovery in its theme park business and continuing signs of a pickup in the advertising market.

International Paper (IP), No. 1 U.S. forest products company, gained 84 cents, or 2.03 percent, to $42.17, bolstering the blue-chip Dow after it posted a net profit for the first time in seven quarters on cost-cutting initiatives.

Qwest (Q) led a downturn of telecommunications stocks after it joined several others that issued 2002 profit warnings. Operators SBC Communications Inc. (SBC), and BellSouth Corp. (BLS)also saw their stocks fall after they issued profit warnings.

Qwest plunged 97 cents to $6.60 for a decline of 12.8 percent and was the most active issue on the New York Stock Exchange. SBC, a Dow stock, fell $1.17 to $32.72 and BellSouth slid $1.33 to $31.37. WorldCom Inc. (WCOM) and Verizon Communications Inc. (VZ) also fell as they got caught in the general nervousness about the telecommunications sector. The S&P Telecom Services Index lost 2.52 percent.

Sun Microsystems Inc. (SUNW), up 63 cents at $9.15, also underpinned the Nasdaq with its gain of 7.39 percent, and was the most actively traded issue on that market. Sun reported a narrower-than-expected loss and stuck to its forecast of returning to a profit in the current quarter, ending in June.

Transmeta Corp. (TMTA) slumped nearly 15 percent after the low-power semiconductor designer reported a wider loss and said its chief financial officer resigned, the latest in a string of executive defections from the once high-flying Silicon Valley start-up. It fell 49 cents to $2.80.

Compaq Computer Corp. (CPQ) rose 31 cents to $11.13. The personal computer maker reported a profit that was hit by lower technology spending, but the results were better than the loss a year ago. It was among the Big Board's most active stocks.

Resistance -- the point where sellers are likely to emerge -- is at 10,300 for the Dow, 1,863 for Nasdaq and 1,135 for S&P, according to research firm Schaeffersresearch.com. Support -- where buyers are expected to swoop in -- is at 10,100 for the Dow, 1,770 for the Nasdaq and 1,110 to 1,120 for the S&P 500.

Advancing issues outnumbered decliners 17 to 14 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, the barometer of smaller company stocks, fell 1.16, or 0.2 percent, to 517.41.

Overseas, Japan's Nikkei stock average finished Friday off 0.5 percent. In Europe, France's CAC-40 and Germany's DAX index each rose 0.4 percent, while Britain's FT-SE 100 advanced 0.3 percent.

Reuters and the Associated Press contributed to this report.