Wall Street was unable to shake its malaise over interest rates Monday, closing mixed despite a rally in technology stocks and a series of upbeat earnings reports from companies including 3M and Eli Lilly. The Nasdaq composite index broke a four-day losing streak.
Worries about rates preoccupied investors for a fifth straight session. While they again shrugged off solid earnings, they also looked past the Conference Board’s index of leading economic indicators, which showed a 0.3 percent rise in March, in line with Wall Street expectations.
The market had hoped the report would show that the economy was growing fast enough to create jobs, but was concerned that a better-than-expected reading might help prompt the Federal Reserve to raise interest rates.
“The interest rate concerns are definitely taking a little bit of steam out of these earnings,” said Scott Wren, equity strategist for A.G. Edwards & Sons.
“We’ll continue to get good earnings, and economic data shows that we’ve got some good economic activity going on here. But until we get the interest rate question settled, we’re going to continue to see a lot of caution,” Wren added.
The technology-loaded Nasdaq composite index rose 24.69 points, or 1.2 percent, to 2,020.43. The tech sector was lifted in part by an upgrade of Advanced Micro Devices Inc., but some investors were also looking for bargains after tech stocks suffered some of the sharpest declines over the past week.
The Dow Jones industrial average closed down 14.12 points, or 0.1 percent, at 10,437.85, while the broader Standard & Poor’s 500-stock index rose 1.21 points, or 0.1 percent, to 1,135.82.
Many investors were waiting to glean some hint of the Fed’s plans from chairman Alan Greenspan, who testifies before Congress on Tuesday, when he will speak about the banking industry, and Wednesday, when he addresses the Joint Economic Committee about the economy.
Still, companies’ solid results were lending some support to an uncertain market.
Dow component 3M Co., which had already raised its quarterly outlook, managed to beat the heightened expectations by 3 cents per share, and gave an improved outlook for the rest of the year, citing stronger health care and manufacturing revenues. 3M was up 3 cents at $83.76.
Advanced Micro Devices rose after Deutsche Bank upgraded the stock from “hold” to “buy,” spurring buying in other semiconductor shares. AMD rose 24 cents to $16.29, while rival Intel Corp. was up 23 cents at $26.68.
Other tech stocks also benefited from the upgrade. Microsoft Corp. rose 37 cents to $25.53, while Dell Inc. was up 37 cents at $35.73. (MSNBC is a Microsoft-NBC joint venture.)
Eli Lilly & Co. beat analysts’ expectations by 4 cents per share for the quarter thanks to double-digit sales growth. The anti-psychotic drug Zyprexa accounted for nearly a third of the pharmaceutical company’s entire sales. Lilly jumped 95 cents to $73.40.
Wachovia Corp. was down 10 cents at $44.65 after exceeding earnings estimates by 4 cents per share. The nation’s fourth-largest bank had fewer bad loans and enjoyed greater productivity — but investors were more focused on the deleterious effect that higher interest rates might have on the company’s profits.
Hasbro Inc., the second largest toy maker in the United States, fell 87 cents to $21.00 after issuing earnings in line with Wall Street estimates, but missing revenue forecasts for the quarter.
“The market has been reacting appropriately to economic news lately, and the fact it hasn’t today is just attributable to low volume and a lack of participants,” said Brian Bruce, director of global investments, PanAgora Asset Management Inc. in Boston. “This is just a temporary reaction. The market will eventually react to this news.”
Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 1.19 billion shares, compared with 1.49 billion on Friday. The Russell 2000 index of smaller companies rose 3.58 points, or 0.6 percent, at 586.95.
Overseas, Japan’s Nikkei average fell 0.5 percent Monday. Britain’s FTSE 100 gained 0.2 percent for the day, France’s CAC-40 closed down 0.2 percent, and Germany’s DAX index fell 0.2 percent.