Apr 17, 2002 4 min read

NEW YORK (AP) – Wall Street got the dose of good news it’s been longing for Tuesday: better-than-expected earnings, and from two big companies, General Motors and Texas Instruments. Stocks surged – the Dow industrials up more than 200 points and the Nasdaq composite index up better than 3 percent – as investors’ faith was renewed in an economic turnaround. “The market is reflecting a better feeling about tech stocks and is also benefiting from strength in GM,” said Alan Ackerman, executive vice president of Fahnestock & Co., although he warned that the market’s enthusiasm likely won’t last as more companies report first-quarter results, some of which are bound to disappoint investors.

“The market is prone to almost unpredictable swings from day to day,” Ackerman said.

But results from Dow industrial Intel, released after the close of regular trading Tuesday, were likely to extend Wall Street’s upbeat mood. Intel met analyst expectations and its stock rose in after-hours trading.

The Dow closed up 207.65, or 2.1 percent, at 10,301.32. It was the Dow’s biggest one-day point gain since March 4, when the blue chips rose 217.96.

The past two sessions illustrate Ackerman’s point about large fluctuations – on Monday, the Dow fell 97.15 Monday to its lowest close since Feb. 22.

The market’s broader indicators also rose sharply. The tech-focused Nasdaq climbed 63.01, or 3.6 percent, to 1,816.79 on Texas Instruments’ profits. The Standard & Poor’s 500 index gained 25.82, or 2.3 percent, to 1,128.37.

GM, the strongest Dow industrial Tuesday, rose $2.95 to $64.05 after reporting first-quarter profits of $1.39 a share, 25 cents higher than analysts had forecast. GM also raised its full-year earnings estimate, a sign that GM believes consumer spending, which accounts for two-thirds of the economy, will continue to strengthen.

Texas Instruments climbed $1.66 to $33.79, having reported earnings late Monday of a penny a share, beating Wall Street’s break-even estimates. The firm also said orders rose and that it has turned the corner in the semiconductor slump.

“We think we can say goodbye to the bottom,” said Ron Slaymaker, the company’s manager of investor relations.

Intel rose $1.40 to $29.51 on Texas Instruments’ good news and ahead of its own earnings released at the end of the day.

Later, when Intel reported that first-quarter profits that met analysts’ expectations, the chip maker rose $1.83 in the extended trading session.

Wall Street welcomed Tuesday’s string of stronger-than-expected earnings following mixed reports from Eli Lilly and Citigroup on Monday and General Electric on Friday and last week’s earnings and revenue warning from IBM.

Other gainers included Johnson & Johnson, up $1.10 at $63.26 on better-than-anticipated results.

Despite Tuesday’s surge, analysts cautioned that the market remains vulnerable to earnings being released this month. As recent proof, they point to last Thursday’s session when the Dow industrials dropped 205.65 on rumors of IBM’s warning.

Analysts are also dubious of technology’s ability to maintain an upturn, because capital spending continues to be soft in high-tech sectors and because investors could try to recoup losses as stocks advance.

“You have to figure that the get-me-out-even syndrome is going to kick in as (techs) rally, and that is going to limit any rally,” said Richard A. Dickson, technical analyst at Hilliard Lyons in Louisville, Ky.

There were some earnings losers Tuesday including Caterpillar, missing expectations by a penny and falling $1.34 to $56.65.

Tuesday’s advance was the first sign of vigor in the market in weeks. Investors skeptical about first-quarter results and prospects for coming quarters had taken the safer route of pulling their money out of the market.

Advancing issues outnumbered decliners slightly more than 2 to 1 on the New York Stock Exchange. Consolidated volume totaled 1.66 billion shares, ahead of Monday’s 1.36 billion.

The Russell 2000 index, the barometer of smaller company stocks, rose 10.21, or 2.0 percent, to 522.95.

Overseas, markets were higher Tuesday. Japan’s Nikkei stock average and Germany’s DAX index each gained 1.9 percent, France’s CAC-40 climbed 2.1 percent, and Britain’s FT-SE 100 rose 1.1 percent.

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