NEW YORK, Oct. 21 (UPI) -- Stock prices on the New York Stock Exchange and Nasdaq soared Monday, lifted by favorable earnings reports from numerous blue-chip companies, including 3M.
The Dow Jones industrial average soared 215.84 points, or 2.59 percent to 8,538.24, having risen 47.36 points Friday. The tech-heavy Nasdaq composite index rose 21.79 points, or 1.69 percent to 1,209.65, after gaining 15.57 points in the previous session.
The broader New York Stock Exchange composite index increased by 7.75 points to 481.69 while the Standard & Poor's 500 index rose 15.33 points to 899.72.
The American Stock Exchange composite index gained 6.33 points to 816.98, while the Wilshire 5000 Index rose 135.51 points to 8,459.29.
Big Board volume was an estimated 1.44 billion shares, while Nasdaq volume reached 1.56 billion shares.
The second peak week for third-quarter earnings began Monday. Seven Dow component companies and about one-third of S&P 500 companies are scheduled to report results during the week.
Big-name companies matching or beating earnings estimates have driven the recent rally. Among the latest was diversified manufacturer 3M, whose products include Scotch tape and Post-It notes. The company reported a 38 percent increase in net income and a 4.6 percent gain in net sales.
3M, based in St. Paul, Minn., said it doesn't see any clear signs of improving economic conditions, but it adjusted its 2002 forecast toward the higher end of its earlier estimates.
Technology issues, which were under pressure early in the day, rebounded. Technology stocks were dragged down as investors digested comments made over the weekend by Microsoft's chief executive officer, Steve Ballmer.
Ballmer said that a surge in first-quarter sales was not sustainable and he forecast tough business conditions ahead. Microsoft last week posted earnings that trounced Wall Street estimates and also raised its full-year revenue and earnings outlook.
But the sector rebounded slightly after investment bank Morgan Stanley raised its earnings per share estimate for Sweden's Ericsson, the world's largest maker of mobile phone networks. On Friday, Ericsson said its losses widened in the third quarter but predicted it would return to profit in 2003.
On the U.S. economic front, the Conference Board said its key measure of future economic activity declined for a fourth month during September.
The board said that its composite index of leading economic indicators fell 0.2 points in September to 111.6 after slipping 0.1 points in August. Economists were expecting the gauge of the economy's performance over the next three to six months to decline 0.2 points during the month.
The board said: "This weakness has been primarily fueled by weak equity markets, a narrowing interest rate spread, and deteriorating consumer expectations."
Ken Goldstein, economist at the board, said: "Four consecutive declines in the leading economic indicators once again raises the question of a double dip. A stalling out of recovery is a more reasonable prospect than the economy falling back into recession.
Analysts said that while the index's latest reading does not necessarily predict a double dip recession, it does point to an anemic pace of manufacturing activity.
Gary Stern, president of the Federal Reserve Bank of Minneapolis, said like some other economic recoveries in the past, the U.S. economy is going through a so-called jobless recovery, since job creation has been very slow.
But Stern expects to see job growth, and economic growth, start accelerating in the second half of 2003.
"It's true that gains in employment have been modest, and perhaps the small gains in employment shouldn't be a surprise since growth itself has been slow," said Stern.
He compared the current situation to the initial portion of the economic expansion that began in 1991, when it took about a year and a half before a significant number of jobs were created.
"I'd suggest a bit of patience is appropriate," said Stern.
Stern, a voting member of the policy-setting Federal Open Market Committee, spokes in Bloomington, Minn., at a conference for the National Association of Purchasing Management.
He dismissed the notion that reallocating resources towards national security could endanger the recovery. But he also noted that it is uncertain how a possible war with Iraq would affect the economy.
As far as Fed policy goes, he said, "We would have to see any implications that the action would have on the economy."
U.S. Treasury prices lost ground. The 10-year bond fell 1 2/32 to 101 3/32. Its yield, which moves in the opposite direction of its price, rose to 4.24 percent from 4.11 percent late Friday.
In Europe, stock prices were little changed in London and Paris but higher in Frankfurt.
The London International Stock Exchange's blue-chip FTSE-100 index added 3.30 points to 4,133.80. The German DAX index rose 119.00 points to 3,282.67, while the French CAC-40 index dipped 0.6 point to 3,156.93.
European markets came off early lows as techs turned mostly positive but the insurance sector remained under pressure on news that Swiss Life was restating its earnings for the second time in a month.
Swiss Life, Switzerland's largest life insurer, restated its first-half 2002 results to show a net loss, saying that it had miscalculated bond values. That marked the second time in a month that it has corrected its results.
Earlier in Asia, prices on the Tokyo Stock Exchange ended lower as investors took profits following five days of advances. The blue-chip Nikkei Stock Average of 225 selected issues dropped 107.72 points, or 1.19 percent, to 8,978.41, dipping below the key 9,000 level after finishing above it on Friday for the first time since Oct. 4. The Nikkei rose almost 8 percent in value in the previous five sessions.
The market came under pressure after the Nihon Keizai Shimbun business daily said that Hitachi had cut its forecast for group operating profit in the year to March 31 to about $1.04 billion.
The newspaper cited a downturn in markets for liquid crystal displays and memory microchips, as well as slack demand for heavy electrical and consumer electronic products.
Analysts said investors were also reluctant ahead of an interim report by a bad-loan task force set up by Financial Services Minister Heizo Takenaka, and the blueprint of an "anti-deflation" policy package from the government.
The task force report is expected on Tuesday, while the policy package is due later in the week.
Prime Minister Junichiro Koizumi said that he had no plans to submit a bill for an extra budget in the current parliamentary session and his pledged cap on new debt issuance was intact.
This again dashed market hopes for bold measures to battle deflation.
Elsewhere in Asia, prices ended slightly lower on the Hong Kong Stock Exchange as local investors took profits on last week's gains and looked to defensive utility plays to help cushion the risk of global economic uncertainties.
The blue-chip Hang Seng Index, which rose 36.92 points Friday, fell 42.71 points, or 0.44 percent, to 9,570.36.
Prices edged up on the Taiwan Stock Exchange. The Weighted Index, which jumped 177.36 points Friday, rose 5.35 points, or 0.12 percent, to 4,463.52, extending its gains into a sixth day.
Prices ended lower in South Korea, pressured by bouts of profit taking. The key Kospi Composite Index, which gained 26.13 points Friday, lost 18.12 points, or 2.70 percent, to 652.67.
Prices were also lower on the Australian Stock Exchange, as the blue-chip All Ordinaries Index, which rose 20.80 points Friday, lost 19.60 points, or 0.66 percent, to 2,947.80.