U.S. stock averages were higher Monday, despite tepid, even negative, news out of corporate America.
The Dow Jones Industrial Average rose 173 points (almost 2 percent) to 9,377. The tech-weighted Nasdaq Composite Index finished with a better than (2 percent) gain closing at 37 points higher at 1,708. The broader Standard & Poor's 500 Index moved up 16 points, (1.5 percent) to 1,089.
The market rallied despite dismal earnings from three Dow components. Profits at diversified industrial giant Minnesota Mining and Manufacturing were 21 percent lower than year-ago levels, as sales fell for the second straight quarter.
SBC Communications, the number two U.S. local phone company, reported a 31 percent drop. SBC says it is cutting several thousand jobs.
And, after the close of business, financial services company American Express reported a 60 percent profit decline, as people cut back on shopping and travel in the wake of the September 11 terrorist attacks.
Thomas McManus, an investment strategist for Banc of America Securities, is telling investors not to expect much of anything from corporate America this year and maybe a modest recovery next year. He said, "We expect the third quarter will be down about 20 percent. The full year will be down about 15 percent. And we actually hope that earnings will be recovering by the second half of next year and that we'll see a flat-ish to up several percent year for 2002."
The latest reading on the U.S. economy indicates the slowdown may last through the beginning of next year. The index of leading economic indicators, which point to business activity in the near future, showed their biggest monthly drop in September in over five years.
Meanwhile, the U.S. steel industry may be on the verge of getting some regulatory help. The U.S. International Trade Commission ruled Monday that cheap imports are hurting domestic steel producers.
U.S. Steel came in with a smaller than expected quarterly loss but warned its business has been undercut by slower demand and lower steel prices.