Wall Street Cautious Amid Profit Worries
NEW YORK – Stocks struggled to close in positive territory Monday as investors remained jittery about U.S. corporate profits despite soothing comments on inflation from the Federal Reserve's chairman.
Early Monday, Fed chairman Alan Greenspan told delegates at the International Monetary Conference in Singapore that he did not see inflationary pressures in the United States. The comment underpinned the tempered optimism about the U.S. economy that began to creep in late last week after a drop in the unemployment rate that helped inspire some buying on Wall Street.
But investors' early enthusiasm was tempered after Cypress Semiconductor Corp. said its earnings and revenues would be lower than expected amid stalled hopes for recovery in the battered computer chip sector.
The blue-chip Dow Jones industrial average closed up 71.24 at 11,061.65, according to preliminary calculations, while the technology-heavy Nasdaq Composite Index advanced 6.49 to 2,155.93. Both indexes started the day lower, but rebounded in the afternoon.
The broader Standard & Poor's 500 Index advanced 6.49 to 2,155.93.
It was the third straight gain for all three indexes, but analysts weren't impressed. The advances amounted to less than 1 percent on each indicator and Nasdaq Stock Market and New York Stock Exchange, according to early figures, were on track to record their lightest volume days of the year.
``Overall, what you're seeing here is a rally in a few high-priced Dow stocks, but not any kind of a broader, more powerful move on the larger market,'' said Richard Dickson, technical analyst at Hilliard Lyons. ``I think investors are still confused about the earnings outlook and what's going on with technology. There are not a lot of compelling reasons to buy, but there are a lot of reasons to be cautious.''
That reluctance spilled over to the technology sector, making for a mixed session. IBM rose 75 cents to $113.64, while Intel fell 24 cents to $28.50 on worries the chip maker will issue an earnings warning at a mid-quarter update scheduled for later this week.
Oil and pharmaceutical components were stronger. ExxonMobil gained $1.88 to $90.83 as part of a broader sector move on concerns about energy prices and world oil supplies, while Johnson & Johnson rose $2.14 to $100.14.
Investors have been skittish in recent weeks on concerns that a widely anticipated fourth-quarter recovery for corporate profits might not happen. The market rallied strongly in April and early May on that hope, but a mix of conflicting economic data and earnings warnings since then have unnerved investors.
Adding to those worries are the second-quarter earnings due out in a few weeks. Those results are expected to be disappointing, but the murky economy outlook has intensified worries that more companies than expected will warn of weak returns. The tech sector is considered especially vulnerable.
``It's the calm before the storm of second-quarter earnings and people are battening down the hatches,'' said Tom Galvin, chief investment officer at Credit Suisse First Boston. ``People aren't expecting much in the way of good news, so that's keeping buyers on the sidelines.''
Advancing issues led decliners nearly 2 to 1 on the NYSE.
The Russell 2000 index was up 5.60 at 507.32.
Overseas, Japan's Nikkei stock average rose 0.4 percent. In afternoon trading, Germany's DAX index gained 0.9 percent, Britain's FT-SE 100 rose 0.8 percent, and France's CAC-40 slipped 0.4 percent.
-- Reuters and the Associated Press contributed to this report.