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Stocks Mixed on Strong Earnings Reports

Posted on: Wednesday, 13 October 2004, 06:00 CDT

NEW YORK - Falling oil prices and strong earnings from Intel Corp. and McDonald's Corp. buoyed investor confidence Wednesday, but stocks were mixed, with blue chips particularly under pressure amid strong buying in the technology sector.

Analysts said the day's trading was part of a broader move away from defensive stocks - industrials, utilities and metals - and back into more growth-oriented areas of the market. If oil prices continue to step away from record highs reached earlier this week and companies issue decent forecasts with their third-quarter earnings reports, it might clear the way for a new rally.

"I think we're seeing a rotation in the market, money is coming out of more cyclical issues and going into technology, and obviously Intel set the tone for that," said Peter Cardillo, chief strategist with S.W. Bach & Co. "If this trend continues, I think tech will become more fashionable and it could lead the market higher as it tries to disconnect itself from the daily price movements of oil."

In afternoon trading, the Dow Jones industrial average shed 38.05, or 0.4 percent, to 10,039.13.

Broader stock indicators were mixed. The Standard & Poor's 500 index was down 3.76, or 0.3 percent, at 1,118.08. The Nasdaq composite index was up 6.90, or 0.4 percent, at 1,932.07, largely on strength in the semiconductor industry.

One day after trading above $54 per barrel, crude oil futures declined, raising hopes for a better economic picture by year's end. Light, sweet crude for November delivery slipped 6 cents to $52.45 per barrel on the New York Mercantile Exchange.

Investors also were cheered by Intel's earnings, released late Tuesday, which beat reduced expectations, as well as by McDonald's outlook. The fast food giant boosted its third-quarter earnings outlook, far outstripping analysts' forecasts.

With oil prices falling - though it remains unknown how far they will fall or how long the retreat will last - investors were able to focus on third-quarter earnings which have been fairly positive so far.

Intel surged 93 cents to $21.21 after beating Wall Street forecasts by 3 cents per share, although analysts' estimates were reduced after a disappointing mid-quarter update from the semiconductor maker. Other chip stocks also gained, with Advanced Micro Devices Inc. climbing 30 cents to $14 and National Semiconductor Corp. rising 61 cents to $15.84.

McDonald's was up $1.07 at $28.62 after it projected earnings of 61 cents per share in the third quarter, crediting a stronger tax situation and better worldwide sales for its upgraded outlook. Analysts had been expecting earnings of 49 cents per share.

Yahoo! Inc. gained $1.14 to $35.37 after quadrupling its profits from a year ago. The company's earnings of 9 cents per share was in line with Wall Street expectations.

Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exc hange. Volume came to 822.38 million shares, compared to 690.08 million shares traded Tuesday.

The Russell 2000 index of smaller companies was down 3.41, or 0.6 percent, at 573.30.

Overseas, Japan's Nikkei stock average fell 0.1 percent. In afternoon trading, Britain's FTSE 100 was down 0.28 percent, France's CAC-40 added 0.15 and Germany's DAX index gained 0.24.

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