Stocks mostly rose in early trading on Tuesday as several better-than-expected corporate earnings reports eased investors' worries about the US economy.
The drugmaker Merck & Co posted a profit for the fourth quarter, topping analysts' expectations despite a decline in sales. The homebuilder DR Horton Inc reported a loss for its latest quarter that was narrower than analysts anticipated thanks to cost cuts. Results from food processor and ethanol producer Archer Daniels Midland Co. and the drugmaker Schering Plough also topped estimates. Not all earnings were stronger than expected, however. Dow Chemical Co., for one, lost more than $1.5 billion in the fourth quarter, while cell phone maker Motorola lost $3.6 billion. Analysts had been forecasting a profit for Dow Chemical, and break-even results for Motorola.
PNC Financial Services Group Inc., one of the largest US banks, said it swung to a loss during the fourth quarter amid charges tied to its recent acquisition of National City Corp. Even excluding the National City-related charges, PNC's results failed to meet analysts' expectations. The Pittsburgh-based bank also said it would cut 5,800 jobs following the purchase.
In Washington, the Obama administration is reworking a bailout package for the struggling financial services industry and devising restrictions on compensation for bank executives. Investors are also bracing for gloomy news when automakers release their January vehicle sales and the National Association of Realtors reports on pending home sales in December. In the first half-hour of trading, the Dow Jones industrial average rose 16.72, or 0.21 per cent, to 7,953.55. Broader stock indicators also rose. The Standard & Poor's 500 index rose 1.01, or 0.12 per cent, to 826.45, but the Nasdaq composite index fell 4.30, or 0.29 per cent, to 1,490.13. Stocks ended Monday mixed, with the Dow and S&P lower and the Nasdaq higher.
The indexes have fallen for four straight weeks due to growing worries about the economy. The Dow and S&P suffered their worst January ever _ dropping more than 8 per cent for the month. Early on Tuesday, bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.78 per cent from 2.72 per cent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.29 per cent from 0.26 per cent late on Monday.