Stocks posted modest gains today as merger activity sparked a rally that petered out by the end of the session as investors turned a wary eye to the upcoming earnings season.
The first wave of corporate earnings reports comes this week and got off to a mixed start as metals giant Alcoa posted a less-than-expected profit of 30 cents per share after the markets closed today, missing earnings forecasts of 42 cents.
Upcoming Earnings Reports
The company said the shortfall was due to one-time costs associated with business units it sold. Revenue rose sharply, however, up 12 percent to US$6 billion for the fourth quarter.
Intel reports tomorrow, Apple is set to post results Wednesday and Sun Microsystems is lined up for Thursday.
Still, the gains marked the first time in 2005 that the three major averages finished in positive territory on the same day. The Dow ended at 10,621.03, up 17.07 points, or 0.16 percent. The Nasdaq gained 8.43 points, or 0.40 percent, to finish at 2,097.04 and the S&P 500 climbed 4.05 points, or 0.34 percent, to finish at 1,190.24.
Oil prices spiked early in the day, reaching their highest levels in over a month, but by the close had retreated and gave up 10 cents per barrel on the day to close at $45.33.
The news was not as good from the currency exchange, with the dollar down 0.4 percent against the yen and the euro.
Before the earnings barrage, mergers were again the main focus of investors, who once again had plenty to choose from. Hollywood Entertainment agreed to an $850 million buyout by Movie Gallery, which outbid Blockbuster for the right to buy the movie rental chain. Also, Western Wireless agreed to be taken over by Alltel in a deal worth close to $6 billion in cash and stock.
And published reports suggested that the financial services sector was about to see its own acquisition, with Wells Fargo & Co. reportedly close to a deal to buy Barclays for around $100 million.