Wall Street snaps back, lifted by upbeat earnings

NEW YORK, Jan 25 (AFP) - US shares snapped higher Tuesday as a series of upbeat profit reports eased concerns about a slowdown in earnings growth and analysts eyed a possible end to the market correction.
The Dow Jones Industrial Average advanced 110.47 points, or 1.07 percent, to 10,479.08 while the tech-heavy Nasdaq rallied 17.76 points, or 0.88 percent, to 2,026.46 at 1650 GMT.
The broad rally lifted the Standard and Poor's 500 index 7.59 points, or 0.65 percent to 1,171.34.
Earnings from three Dow components were reassuring for Wall Street, which had been fretting over a slowdown in profits. Johnson and Johnson along with Dupont topped the average analyst forecast for earnings, while Merck met the Wall Street estimate.
Also helping sentiment, the Conference Board said its consumer confidence index rising to a better-than-expected 103.4 from 102.7 in December.
Those factors helped bring the market out of a four-day losing streak that had pushed the main indexes to their lowest levels in more than two months.
"Just when you least expect it the market turns," said Hugh Johnson chief investment officer at First Albany.
"The most important thing is that the market had gone down so many days and the market looked arguably cheap in the eyes of many investors," he added but noted that investors were probably encouraged by the good earnings numbers seen Tuesday.
Also setting a positive tone for markets was news of 9.5 percent economic growth in China.
"That means it's not much chance of a hard landing in China that will be transmitted to the rest of the world," said Johnson.
Meanwhile a number of analysts said the market had now corrected and was oversold, setting the stage for a possible uptrend.
"The market is now into week four of this correction and the various market averages have given back 40 to 60 percent of their nine-week, year-end rally," said Alfred Goldman at AG Edwards.
"This is both the time frame and price area to watch for potential support to unfold as selling pressure gets worked off and potential bargain hunters step forward."
Among active US shares, Johnson and Johnson rallied 1.72 or 2.8 percent to 63.21 after it posted adjusted earnings ahead of Wall Street forecasts.
Fellow drug company, Merck climbed 1.01 or 3.4 percent to 30.86 after it released an earnings report in line with forecasts and reaffirmed future earnings guidance.
DuPont added 99 cents to 47.00 after the chemical giant bested expectations with its quarterly earnings report and gave an upbeat outlook.
In the finance arena, Merrill Lynch rose 1.14 to 57.94 after the brokerage giant said fourth-quarter net income fell 1.8 percent from year-ago levels but earnings were still well above the figure expected by analysts.
In the tech sector, Corio posted the sector's largest percentage gain, rising 35 percent, or 72 cents, to trade at 2.77 after IBM said it would buy the information services company for 182 million dollars in cash. IBM added 56 cents to 92.35.
On the downside, BellSouth fell 28 cents to 26.28 after the telecom group chalked up higher fourth-quarter net income owing to sales of Latin American assets, but profit from core operations declined.
Bonds slumped on the shift into equities. The yield on the 10-year Treasury bond rose to 4.183 percent from 4.122 percent Monday and that on the 30-year bond to 4.658 percent from 4.606 percent. Bond yields and prices move in opposite directions.

01/25/2005 16:59 GMT - AFP