Stocks higher as tech profit reports draw attention

NEW YORK -- Wall Street bounded higher Wednesday, lifting the Nasdaq composite index well over 1 percent after profit reports from Yahoo Inc. and Sun Microsystems Inc. restored investors' confidence in the tech sector. The Dow Jones industrials logged fresh trading and closing highs.

Tech stocks have borne most of Wall Street's concern about the health of corporate earnings in recent weeks.

Restive investors, taking their cues from a flurry of profit reports, have been at turns pleased and concerned about the prospects that profit growth will help drive stocks higher following a sharp run-up in 2006.

In an essentially all-earnings day, investors were left without new economic data to help provide some clues about the direction of interest rates.

"I think investors were waiting with the techs for the earnings to come out," said Neil Massa, equity trader at John Hancock Funds. "Investors were in the show-me mode. They had to be shown good numbers because they didn't want to take anything for granted because they had been laggards for a while."

The tech-laden Nasdaq composite index jumped 34.87, or 1.43 percent, to 2,466.28. The gain marked the Nasdaq's biggest one-day increase since early December.

The Dow rose 87.97, or 0.70 percent, to 12,621.77 after rising 56.64 on Tuesday. The Dow surpassed a record close of 12,582.59 set Jan. 16; it was the Dow's 26th record close since the blue chip average began its surge higher at the start of October. The Dow also reached a record intraday high of 12,623.45, topping a trading high of 12,614.00 reached a week earlier.

The Standard & Poor's 500 index reached a six-year high, rising 12.14, or 0.85 percent, to 1,440.13.

Bond prices showed little change as there was no economic news to guide investors. The yield on the benchmark 10-year Treasury note was flat at 4.81 percent from late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude settled up 33 cents at $55.37 per barrel on the New York Mercantile Exchange as investors grew more confident OPEC would make good on production cuts and cooler weather took hold in the Northeast. Prices rose even as U.S. government figures showed a build in crude, gasoline and distillate inventories last week. On Tuesday, oil rose more than $2 per barrel on news that the United States plans to double the size of its Strategic Petroleum Reserve.

Among energy companies, Exxon Mobil Inc. rose 41 cents to $74.90. The energy sector appeared to take in stride the president's call for austerity in gasoline consumption, though some companies that make a business of alternative energy products were lower. Xethanol Corp., an ethanol maker, fell 31 cents, or 10.10 percent, to $2.76, while larger rival Archer Daniels Midland Co. declined 54 cents to $32.09.

Health care stocks also appeared little moved by the speech; Aetna Inc., the insurer, fell 44 cents to $41.74, while drug maker Pfizer Inc. rose 45 cents to $26.82.

Kim Caughey, equity research analyst at Fort Pitt Capital Group, noted that investors are focusing on earnings reports for comments on current and future business conditions and for hints as to whether inflation will cool adequately to allow the Federal Reserve to lower short-term interest rates.

"Investment mangers are looking at two areas, one is inflation and one is growth," she said. "Far out in the future they kind of tie together because if we have too much inflation the Fed is going the take the punch bowl away."

In other corporate news, Yahoo jumped $1.98, or 7.3 percent, to $28.94 after the Internet-search company's fourth-quarter profit topped Wall Street's estimates. The company unveiled an ad search technology and said it expects to draw more revenue from each page view during the year.

Sun Microsystems, a maker of server and storage products, rose 49 cents, or 8.7 percent, to $6.15 after the company reported its first quarterly profit in years as revenue increased. Earnings were above what Wall Street expected.

McDonald's Corp. fell 69 cents to $44.16 after some analysts said operating profits at the world's largest fast-food came in lower than expected. Overall fourth-quarter earnings were in line with Wall Street's estimates. The company's profit more than doubled amid a spinoff of a burrito chain and strong sales in Europe.

Advanced Micro Devices Inc. fell $1.48, or 8.5 percent, to $16.03 after the chip maker swung to a loss from a profit in its fourth quarter. Sales of high-margin server chips were flat in the fourth quarter.

Corning Inc., which makes glass, fiber optics and specialty materials, rose $2.06, or 10.9 percent, to $20.90 after posting a stronger-than-expected fourth-quarter profit amid strong sales of liquid-crystal-display glass for flat-screen televisions. The company forecast strong growth in its glass-monitor business.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.86 billion shares, compared with 3.02 billion shares traded Tuesday.

The Russell 2000 index of smaller companies was up 8.65, or 1.10 percent, at 794.03.

Overseas, Japan's Nikkei stock average closed up 0.57 percent. Britain's FTSE 100 closed up 1.40 percent, Germany's DAX index finished up 1.04 percent, and France's CAC-40 was up 1.13 percent.

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