Stocks rose on Thursday, with the broad market eking out the first back-to-back rise in three weeks, as Wall Street cheered the latest corporate results and pointed to comments from Federal Reserve Chairman Alan Greenspan as a sign the recession-bound economy is on the road to recovery.
Dow Jones industrial average rose 65.52 points, or 0.67 percent, to 9,796.48, while the Nasdaq composite added 20.14 points, or 1.05 percent, to 1,942.52. The benchmark Standard & Poor's 500 gained 3.97 points, or 0.35 percent, to 1,132.15.
"Greenspan told us things are looking better and that the big negatives on the economy last year are improving," said Robert Barbera, chief economist for brokerage and asset management firm Hoenig & Co. "What we're getting across most categories is news that the worst is behind us."
Greenspan's testimony to the Senate Budget Committee boosted stocks after he said "there have been signs recently that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm." This reinforced the view among traders the central bank will not change interest rates when it meets next week, analysts said.
"The odds are that the Fed doesn't move. I don't think that that is a market negative at all," said Barry Hyman, chief investment officer at Ehrenkrantz King Nussbaum. "That's an indicator that when we start to see some of the first-quarter (2002) numbers for earnings and the economy, we will start to see the semblances of a growth story developing."
Thursday marks the busiest day for companies in the Standard & Poor's 500 index to release earnings -- 64 companies were set to report in a single day. Estimate-beating results came from companies Nokia Corp. , the world's largest cellular phone maker, and EMC Corp. , the world's largest maker of data-storage systems.
So far, 60 percent of companies in the S&P 500 have reported profits that beat forecasts, said research firm Thomson Financial/First Call. That's in line with the historical average. Even so, profits on average are down 21.6 percent for the second straight quarter -- the worst showing in a decade.
Despite the fourth quarter's dismal results, investors are sensing a business pickup.
"There are positive surprises on a number of fronts," said Phil Dow, director of equity strategy for RBC Dain Rauscher. "You've had a number of companies with better-than-expected results and better commentary on how business is doing. Nokia is one and EMC is another."
Nokia rose $1.09 to $23.30. The Finland-based firm unveiled a bigger-than-expected profit on the back of strong Christmas sales of mobile phones. Nokia said it saw orders pick up and stuck to sales growth targets.
EMC reported a net loss that was smaller than forecasts and said the firm's cost-cutting was ahead of schedule. Shares jumped $2.27 to $16.83, or 15.59 percent, in active trade.
Photography giant Eastman Kodak Co., a Dow component, rose $1.74 to $28.24. It reported a sharp drop in earnings and warned of more weakness ahead. Chief Financial Officer Bob Brust said he did not expect an economic recovery in 2002, but believes it will occur in 2003.
McDonald's Corp. said net income fell 40 percent, its fifth straight quarterly decline, as the fast-food giant took charges for U.S. restructuring and faced declining sales in Latin America and Asia. McDonald's, a Dow stock, fell 93 cents to $26.47.
"The earnings are pretty positive today," Hyman said. "But the market is still kind of confused as to how earnings estimates are being beaten. It's really being done not by revenue growth but by cost cutting, and that's not a long-term story that can develop. It has to be a demand story."
A fall in weekly U.S. jobless claims buoyed market sentiment. The number of U.S. workers applying for state unemployment benefits fell last week to 376,000 from 391,000 in the previous week, signaling a stronger labor market than economists polled by Reuters had forecast.
Siebel Systems Inc. surged after the No. 1 seller of software that manages selling and customer service activities posted a drop in profits that still beat the consensus of Street estimates. Shares climbed $2.09 to $36.89.
A slew of drug and health-care companies handed in results. Eli Lilly and Co. reported lower profits in line with forecasts, as it struggles to rebound from the loss of U.S. patent protection over antidepressant Prozac, its flagship drug. Lilly fell $1.67 to $74.10.
Biotechnology issues took a hit after some downbeat news from companies such as Amgen Inc. , the world's largest biotechnology company. Amgen said net income fell 23 percent because of costs to end collaborations and inventory write-offs. Amgen shares fell $1.25 to $57.21. The American Stock Exchange's Biotech Index fell 2.18 percent.
Defense stocks shot higher as comments on government spending from Greenspan, coupled with several companies' solid outlooks for 2002, sparked a broad rally. Shares of every major defense contractor gained ground and the Standard & Poor's aerospace and defense index climbed 3.94 percent.
Raytheon Co. , maker of the Tomahawk and Patriot missiles, rose $2.14 to $34.24. The firm missed the consensus target for earnings but offered analysts a relatively upbeat view of 2002, eyeing growth in its military business.
Oil drillers also moved higher, led by Halliburton Co. , whose shares soared despite a cut in the company's credit rating, after it said it is keeping the cost of asbestos damages claims under control. Halliburton, one of the most active shares on the Big Board, rose $2.57 to $13.37, or 23.8 percent. The Philadelphia oil services index gained 3.68 percent.
Advancing issues outnumbered decliners slightly more than 4 to 3 on the New York Volume totaled 1.49 billion shares, ahead of the 1.44 billion shares traded Wednesday.
The Russell 2000 index, the barometer of smaller company stocks, rose 2.28, or 0.5 percent, to 479.73.
Overseas, markets were higher Thursday with Japan's Nikkei stock average finishing up 0.3 percent. In Europe, France's CAC-40 finished up 1.4 percent, Britain's FT-SE 100 rose 1.0 percent, and Germany's DAX index inched up 0.1 percent.
Reuters and the Associated Press contributed to this report.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox