NEW YORK – Investors are back to being optimistic about companies' earnings.
Stocks ended a choppy day with a moderate rebound Monday. The Dow Jones industrial average regained 56 of the 261 points it lost on Friday, and the other major indexes also rose.
Analysts said investors shaken by recent disappointing economic reports went back to focusing on the flood of earnings numbers that will be released in the next few weeks. They also got a shot of optimism from a batch of big airplane orders at the Farnborough International Airshow in Britain.
The change in sentiment allowed investors to shake off their dismay early in the day at news from the National Association of Home Builders that its confidence index sank to 14, its lowest level since March 2009. A reading below 50 indicates homebuilders have a negative view of the housing market. The report was the latest in a series of disappointing housing numbers that began appearing after the government's home buyer tax credit expired at the end of April.
Stocks fell sharply Friday after news of a drop in consumer confidence, a negative signal for the economy, which relies heavily on consumer spending for growth. Stocks also fell after big banks' earnings had investors doubting whether financial company profits would be curtailed in the future by new federal regulations.
"The market is caught up by this fear factor over how much the economy has slowed and what does it mean in terms of future earnings growth," said Peter Cardillo, chief market economist for Avalon Partners in New York. "Today the market seems to be paying less attention to some of the global problems that have been dragging it down."
Alan Gayle, senior investment strategist for RidgeWorth Investments, said Monday's market moves were in part a response to the announcement of better-than-expected orders for Boeing Co. The aircraft maker announced orders the Farnborough show, including a deal with Dubai-based airline Emirates worth $3.6 billion. Boeing also said GE Capital Aviation Services placed a $3 billion order.
The announcements suggest companies around the world are willing to spend, which is encouraging to investors who have worried about the strength of the global recovery. The homebuilders survey was disappointing, but the market is more focused on corporate earnings right now, Gayle said.
According to preliminary calculations, the Dow rose 56.53, or 0.6 percent, to 10,154.43. The Standard & Poor's 500 index rose 6.37, or 0.6 percent, to 1,071.25, while the Nasdaq composite index, lifted by a rally in tech stocks, rose 19.18, or 0.9 percent, to 2,198.23.
Gainers outnumbered losers by 2 to 1 on the New York Stock Exchange. Volume was light, which can help exaggerate price moves. More than 954 million shares changed hands.