NEW YORK – Stocks rebounded modestly Tuesday, withstanding choppy trading in an encouraging sign of stability following an earnings warning by Cisco Systems.
Better-than-expected results from Intel and Texas Instruments after regular trading ended added to the sentiment that earnings might be improving. Market watchers remained cautious, however, noting that many more companies are still scheduled to release first-quarter results.
“It’s good news the market was able to recover, but we still have a lot of earnings reports to get through,” said Charles Reinhard, senior U.S. investment strategist at Lehman Brothers. “By the end of this week, half of the companies of the Dow will have reported earnings and investors will have a better idea of what is ahead.”
The Dow Jones industrial average closed up 58.17 at 10,216.73, after spending much of the session with losses. The advance was powered by a late-session surge as investors appeared to gain confidence about the market’s prospects.
Broader indexes also were higher. The Standard & Poor’s 500 index advanced 12.13 to 1,191.81, and the Nasdaq composite index gained 13.65 to 1,923.22.
Stocks fell after the opening but began to recover as investors digested news from the Federal Reserve, which reported that industrial production at the nation’s factories rose a solid 0.4 percent in March, exceeding many analysts’ expectations. That marked the first rise since September.
Many analysts had expected sizable losses in response to Cisco announcement late Monday that it expects earnings per share to be in the “very low, single-digit range.” Analysts surveyed by Thomson Financial/First Call were expecting 8 cents per share.
Cisco, which fell sharply after trading began, made up some of that loss to end trading down 55 cents at $16.65.
Analysts said Tuesday’s trading shows that investors have made their peace with earnings warnings and built those expectations into stock prices.
