NEW YORK–Cautious optimism over corporate earning sent the stock market higher yesterday.US companies start reporting their second-quarter results this week, led by aluminium producer Alcoa, the first company in the Dow Jones industrial average to announce results. Other major companies reporting include JPMorgan and Wells Fargo.Analysts predict that earnings growth for companies in the Standard & Poor's 500 index rose 3 per cent in the second quarter. While growth is down from 5 per cent in the first quarter, earnings are still expected to reach record levels.Investors and traders will search for evidence that companies are increasing revenues, not just cutting costs to boost profits. Sales growth is predicted to fall 0.3 per cent in the second quarter."We'll be looking to see where revenue comes in," said Jim Dunigan, an executive vice president of investments at PNC.
After the market closed yesterday, Alcoa reported a wider second-quarter loss due to weak aluminium prices.Alcoa lost $119 million, or eleven cents per share, in the April-through-June quarter. That compared with a loss of $2 million, or break-even on a per-share basis, a year earlier.Alcoa fell five cents, or 0.6 per cent, to $7.87 in after-hours trading.The Dow rose 88.85 points, or 0.6 per cent, to close at 15,224.69. The Standard & Poor's 500 index gained 8.57 points, or 0.5 per cent, to end at 1,640.46.Dell was among the big gainers in the S&P 500 index. An advisory firm recommended that company shareholders support a plan to take the computer company private. Founder Michael Dell and Silver Lake Partners have offered to buy Dell for $24.4 billion, or $13.65 a share. Dell rose 41 cents, or 3.1 per cent, to $13.44.The Russell 2000 index, an index of small-company stocks, closed at an all-time high 1,009.25. The index past the 1,000 mark for the first time Friday and has gained 18.8 per cent this year, a sign that investors are more willing to take on risk.
In other trading, the Nasdaq composite rose 5.45, or 0.2 per cent, to 3,484.83, the smallest gain of the major indexes.The index was weighed down by a slump in Intel. The chipmaker fell after a Citigroup analyst wrote that weak PC sales and waning demand for smartphones would stunt the company's growth. Intel, which makes up 2.2 per cent of the Nasdaq, fell 88 cents, or 3.6 per cent, to $23.18.Other chipmakers also declined. Qualcomm dropped 96 cents, or 1.6 per cent, to $59.99.In government bond trading, the yield on the ten-year government note pulled back from a two-year high of 2.74 Friday. It fell to 2.64 per cent on Monday.The yield had jumped after the government reported strong US hiring for June on Friday. Investors believe that the improving jobs market will prompt the Federal Reserve to ease back on its bond-buying programme. The Fed is buying $85 billion in bonds each month to keep interest rates low and spur borrowing and investing.For the first five months of the year stocks moved higher, supported by the backdrop of low interest rates, a recovering housing market and increased hiring. The S&P 500 index gained 17 per cent by May 21 and stood at a record 1,669. But the stock market pulled back when Fed chairman Ben Bernanke said that the central bank might consider easing its stimulus.The S&P 500 dropped as low as 1,573 on June 24, about 5.7 per cent below its record close. (AP)