NEW YORK – Stocks rose Monday in a volatile session after investors received encouraging earnings news from retailers like Lowe's and Toys R Us. But trading was light and subdued as most awaited the Federal Reserve 's rate-setting meeting on Tuesday.
The blue-chip Dow Jones industrial average rose 79.29 points to end at 10,320.07, while technology-laden Nasdaq Composite Index gained 14.34 points to 1,881.35. The broader Standard & Poor's 500 Index added 9.44 points to finish at 1,171.41.
About 890 million shares changed hands on the New York Stock Exchange while 1.16 billion traded on the Nasdaq, making it the fourth-lightest session of the year, according to preliminary figures.
``Everyone's waiting for the Fed to see what it says,'' said Mark Coffelt, who helps manage Texas Capital's Value & Growth portfolio. ``The key is their attitude. Hopefully they'll say 'the economy is recovering, but if it's not, we'll lower interest rates more.'''
The central bank is widely expected to cut its key federal funds rate by a quarter of a percentage point this week, and traders will be watching keenly for clues to whether the Fed will lower rates further to spur the sagging U.S. economy.
With few bright spots in the bleak U.S. corporate profit picture in recent weeks, however, traders were doubtful the stocks would gain much upward momentum.
``Things are pretty much close to fair value or lower, so I don't expect to see anything but a technical rally this week because these markets are still not reacting to anything except a lack of earnings and a lack of economic growth,'' said James Volk, co-director of institutional trading at D.A. Davidson & Co.
``Until we get that, I don't see any reason for these markets to get any better,'' Volk added.
In economic news, the Conference Board said its index of leading economic indicators scored a fourth consecutive month of gains in July, hinting the economy could show signs of recovery in the months ahead.
Lowe's, the No. 2 home-improvement retailer behind Home Depot Inc. reported on Monday its earnings rose 18 percent, helped by strong sales of appliances and paint.
Lowe's earnings landed on the high side of analysts' estimates for the quarter ended Aug. 3 with a profit of $329.1 million, or 42 cents a diluted share, compared with $279.6 million, or 36 cents a diluted share, split adjusted. Lowe's split its stock two-for-one in June. Its stock climbed $2.80 to $37.84.
Toys R Us, the No. 1 U.S. toy chain, reported a loss, hurt by the stalled U.S. economy and spending to remodel stores. But the company expects to return to profitability by the fourth quarter and is ``comfortable'' with current consensus estimates for this year. It gained $1.62 to $24.02.
With few bright spots in the bleak corporate profit picture in recent weeks, however, traders said the stock market would gain much upward momentum.
``I don't expect to see anything but a technical rally this week because these markets are still not reacting to anything except a lack of earnings and a lack of economic growth,'' said James Volk, co-director of institutional trading at D.A. Davidson & Co. ``Until we get that, I don't see any reason for these markets to get any better.''
Executive recruitment firm Korn/Ferry International said it expects a fiscal first-quarter loss and will cut its work force by 20 percent, or nearly 500 employees. The company also said executive salaries have been cut by 10 percent as part of a restructuring initiative to reduce expenses. Its stock slumped $1.19 to $14.
The automobile sector was battered on Monday after Goldman Sachs Group Inc. lowered its outlook for Ford's 2002 earnings per share, citing eroding market share and profit margins in the company's light trucks unit.
Ford fell $1.30 to $20.40 and GM lost $3.47 to $56.
Airline stocks were also in focus after Goldman Sachs cut its earnings estimates for airlines across the board, based on a slower-than-expected recovery. AMR Corp., parent of American Airlines was up 50 cents at $32.96, while Continental slipped 72 cents to $43.28.
Retail bakery chain Krispy Kreme Doughnuts Inc. jumped $3.47 to $34.19, after the investment bank Deutsche Banc Alex. Brown forecast stronger-than-anticipated profits for the doughnut chain as it keeps adding stores.
In the high-tech sector, communications gear maker Ciena Corp. slumped $1.23 to $17.55 after Lehman Brothers cut its rating.
Internet equipment maker Enterasys Networks Inc. was also rattled by a downgrade after Morgan Stanley cut its rating, citing a build-up in inventories among its distributors that points to a challenging environment and raises concerns about meeting future expectations. Morgan Stanley also downgraded Internet infrastructure company Extreme Networks. Enterasys plunged nearly 30 percent, down $3.86 to $9.19, while Extreme Networks lost $5.95 to $16.50.
The Russell 2000 index, the barometer of smaller company stocks, rose 3.22 to 478.87.
Overseas markets were mixed Monday. Japan's Nikkei stock average posted its lowest close in nearly 17 years, finishing down 1.6 percent Monday, its fourth straight losing session. France's CAC-40 and Britain's FT-SE 100 each rose 0.3 percent, while Germany's DAX index slipped 0.3 percent.
On Friday, the Dow tumbled 151.74 points to 10,240.78, its lowest finish since mid-July, while the S&P dropped 19.69 points to 1,161.97, its lowest close since April 9. The Nasdaq sank 63.31 points to 1,867.01, hitting its lowest close since April 10.
Reuters and the Associated Press contributed to this report.