Stocks end mostly higher ahead of earnings reports

NEW YORK -- Stocks ended mostly higher Monday ahead of a flurry of earnings reports that could determine whether the economy is really getting better, as investors have been hoping over the past month as they drove the market higher.

Early signs were good. Goldman Sachs Group Inc. surprised investors after the end of trading Monday when it released better-than-expected quarterly results and announced a $5 billion stock offering. The company had been scheduled to report results today.

The bank's $1.7 billion profit was just the sort of good surprise traders were eager for Monday as they snapped up financial stocks. Some are looking for signs of recovery, while others don't want to get burned if banks beat the low expectations the market has set for the industry.

The buying helped the Dow Jones industrial average turn a 120-point deficit into a modest loss of 26 points by the time the closing bell sounded. Broader indexes managed to post gains. Trading volume was light, which can skew the market's moves.

The occasional bouts of selling after a long holiday weekend were orderly and suggested that traders were reluctant to give up on a five-week rally. The earnings reports and economic figures due this week could reignite buying if they beat Wall Street's modest expectations.

"If you get a couple earnings reports that are better than the worst that people expected then that might help," said Denis Amato, chief investment officer at Ancora Advisors.

Beyond banks, industrial stocks ended mixed after Boeing Co. and Chevron Corp. said the weak economy was hurting their results.

Beyond the buying in bank stocks, the market was unsettled by a New York Times report saying the Treasury has directed General Motors Corp. to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file if it cannot complete a plan to exchange debt for equity, according to the report.

The Dow fell 25.57, or 0.3 percent, to 8,057.81. The Standard & Poor's 500 index rose 2.17, or 0.3 percent, to 858.73, and the Nasdaq composite index rose 0.77, or 0.1 percent, to 1,653.31.

Boeing fell 5 percent and weighed on the Dow as analysts cut their ratings and estimates for the aircraft maker after it said it would reduce production of some jetliners next year.

Chevron lost 1.8 percent after saying first-quarter earnings will be sharply lower due to falling oil and natural gas prices.

Investors are looking to a rush of numbers this week, including quarterly reports from JPMorgan Chase & Co. and Citigroup Inc. Financial companies had been among the hardest hit by the recession and credit crisis, but they have also helped lead the rally in the past month.

Goldman rose 4.7 percent before slipping 1 percent in after-hours electronic trading after the company released its earnings. JPMorgan ended the day up 2.9 percent and Citigroup rose 25 percent, while Bank of America Corp. rose 15 percent.

Analysts said some of the buying could reflect traders stepping in to cover misplaced bets that banks would fall when they post results this week. Traders who sell stocks "short" are forced to buy to avoid further losses.

Some predictions for banks brightened last week when Wells Fargo & Co. jolted investors with an announcement that it expected to report a $3 billion profit for the first quarter. Stocks surged Thursday on the news, giving stocks moderate gains for the week. Markets were closed for Good Friday.

Les Satlow, portfolio manager at Cabot Money Management in Salem, Mass., said the banks may have escaped an outright takeover by the government but that investors must still confront the serious troubles that remain.

"The specter of nationalization has been chased away," he said. "We're back to the reality that we have a severe recession with sharply deteriorating credit quality."

Investors have been buying stocks in part because of the idea that improvements at banks could help lift the economy by boosting lending and helping the stock market stabilize. The Dow has rallied for five weeks, but last week showed increased volatility as investors prepared for earnings reports.

On Monday, GM was the biggest decliner among the 30 stocks that make up the Dow as investors worried about what a bankruptcy might mean for the economy. GM fell 33 cents, or 16.2 percent, to $1.71.

Investors are awaiting quarterly results this week from key companies in other industries, including Intel Corp., Johnson & Johnson and General Electric Co. Reports on inflation, housing and manufacturing are also due.

In corporate news, prescription benefits manager Express Scripts Inc. said it will buy the pharmaceutical benefit management operations of health insurer WellPoint Inc. for $4.68 billion. WellPoint gained $3.24, or 8 percent, to $43.58 while Express Scripts rose $7.64, or 15 percent, to $56.81.

In other market action, the Russell 2000 index of smaller companies slipped 0.15, or less than 0.1 percent, to 468.05.

About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.8 billion shares traded Thursday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 2.86 percent from 2.92 percent late Thursday. The yield on the three-month T-bill rose to 0.18 percent from 0.17 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell $1.19 to settle at $50.05 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 0.4 percent. Major European markets were closed Monday for Easter.