What May Change The Pace

Stocks ended the day higher as increased volatility created trading opportunities for both sides of the market. Price action opened lower for the day and gave us big shifts higher and lower, before rallying into the close. Volume was once again absent, as the Dow and S&P 500 remain below their 20-day moving averages, and the Nasdaq right on this mark. Pressing geopolitical issues were once again at hand as many speculate how Friday's UN resolution may change the pace for disarming Iraq.

The Dow Jones Industrial Average ($INDU.X | Quote | Chart | News | PowerRating) closed +0.91% at 7,775.60. The S&P 500 ($SPX.X | Quote | Chart | News | PowerRating) closed +0.95% at 829.85. The Nasdaq ($COMPQ | Quote | Chart | News | PowerRating) closed +0.50% at 1,314.40.

Leading today were insurance ($IUX.X | Quote | Chart | News | PowerRating), +1.94%, semiconductors ($SOX.X | Quote | Chart | News | PowerRating), +1.57%, healthcare ($HCX.X | Quote | Chart | News | PowerRating), +1.47%, and airlines ($XAL.X | Quote | Chart | News | PowerRating), +1.28%.

Biggest losers on the day were software ($GSO.X | Quote | Chart | News | PowerRating), -0.75%, oil service ($OSX.X | Quote | Chart | News | PowerRating), -0.33%, and telecoms ($XTC.X | Quote | Chart | News | PowerRating), -0.12%.

In economic news, ISM Services came in at 53.9 vs. expectations of 53.0.

The Ten Year Note (TYH3 | Quote | Chart | News | PowerRating) was +090 at 117 130.

The US dollar (DXH3 | Quote | Chart | News | PowerRating) was -0.87 at 98.29.

Volume was below average, with the NYSE coming in at 1,290,209,000 and the Nasdaq at 1,348,464,000.

Market breadth was mixed, with NYSE advancing issues over declining issues by a ratio of 1.17, and up volume over down volume by a 1.61 ratio. Nasdaq declining issues over advancing issues came in at 1.10, and down volume beat up volume by a 1.44 ratio.

Discount retailer Costco (COST | Quote | Chart | News | PowerRating), -1.87% at 28.75, posted earnings a penny short of expectations with profits of $0.42 per share. Revenues were reported up 7.8% from a year ago.

In the defense sector Northrop Grumman (NOC | Quote | Chart | News | PowerRating), -4.02% at 83.75, lowered its earnings guidance for the year due to higher interest expenses while it pays off debt.

Aerospace and defense contractor Boeing Co. (BA | Quote | Chart | News | PowerRating), -2.58%a t 26.74, hit a new 52-week low after the company's CEO told a German newspaper that BAE Systems would make an interesting merger candidate. Also making new 52-week lows on the Dow were Coca-Cola (KO | Quote | Chart | News | PowerRating), -2.13% at 37.55, DuPont (DD | Quote | Chart | News | PowerRating), +0.28% at 35.67, and McDonalds (MCD | Quote | Chart | News | PowerRating), -1.08% at 12.77.

Ice cream maker Dreyer's Grand Ice Cream (DRYR | Quote | Chart | News | PowerRating), -14.58% at 63.70, melted after US trade regulators voted against Nestle's move to buy the company for $2.8 billion. Deutsche Bank downgraded the company to "sell" after the announcement.

Entertainment giant Walt Disney (DIS | Quote | Chart | News | PowerRating), -0.68% at 15.94, sold off after Merrill Lynch cut its estimates on the company due to negative consumer confidence, cold weather, and terrorist threats.

Toy maker Toys "R" Us (TOY | Quote | Chart | News | PowerRating), -0.12% at 7.90, beat its fourth-quarter earnings by $0.03 per share with profits of $1.30 per share.

Software maker Oracle (ORCL | Quote | Chart | News | PowerRating), -3.95% at 11.17, is believed by Lehman Brothers to have had a tough month of sales in February, and believes the company will disappoint on their revenue numbers. The stock is leading a weak software sector today.

Shipping company United Parcel Service (UPS | Quote | Chart | News | PowerRating), -1.37% at 56.05, had its 2003 estimates cut by Morgan Stanley to $2.26 per share vs. previous estimates of $2.34 per share.

Biotech company Genzyme (GENZ | Quote | Chart | News | PowerRating), -1.09% at 30.58, missed its fourth-quarter earnings expectations by $0.01 with profits of $0.34 per share.

Beverage company Pepsi Bottling (PBG | Quote | Chart | News | PowerRating), -17.98% at 18.20, guided lower for the first-quarter, and now sees earnings per share between $0.12-0.14 vs. previous expectations of $0.20.

Office supply maker Staples Inc. (SPLS | Quote | Chart | News | PowerRating), +6.32% at 17.65, beat its fourth-quarter earnings expectations by $0.02 with profits of $0.35 per share.

From TM's Momentum List, biotech company Biovail (BVF | Quote | Chart | News | PowerRating), +7.17% at 38.41, and business services company eResearch Technology (ERES | Quote | Chart | News | PowerRating), +6.91%.

danielb@tradingmarkets.com