Earnings, big merger boost the market

Earnings, merger boost the Dow

3M sees good growth, GE buying Honeywell

NEW YORK (CBS.MW) – Strong earnings from a couple of blue chips and a big merger boosted the Dow Jones Industrial Average on Monday. The Nasdaq couldn’t hold its gains and slipped into the red.

“We’re seeing a lot of depressed stocks turning back around,” said Peter Cardillo, chief strategist for Westfalia Investments. “Earnings are finally giving this market a lift.”

“This is the third day of follow-through since the market reached a bottom on Wednesday,” said Art Hogan, chief market strategist at Jefferies & Co.

The Dow Jones Industrial Average ($INDU) rose 91 points to 10,317 or 0.9 percent. The Nasdaq Composite ($COMPQ) fell 15 points to 3,468 or 0.4 percent and the S&P 500 ($SPX) was flat at 1,397.

The Nasdaq 100 index ($NDX) sank 31 points to 3,425.

“Today doesn’t mean a whole lot,” said Ned Collins, head of trading at Daiwa Securities. “We need to do more work to see if we have reached a bottom.”

Decliners outpaced advancers 7 to 6 on the New York Stock Exchange, but advancers were narrowly ahead of decliners on the Nasdaq. Some 580 million shares changed hands on the NYSE and 1 billion on Nasdaq.

A $45 billion plan by General Electric (GE) to buy Honeywell (HON) was one of the key items shaping the trading day.

Shares of General Electric fell $3 to $49.25 Monday after the industrial giant said late Sunday it would outbid United Technologies (UTX) for Honeywell.

Honeywell gained $3.81 to $49,81, after surging $10.13 on Friday.

Under terms of the deal, GE will pay 1.055 shares of its stock for each Honeywell share. Honeywell is valued at $55.12 each under the deal. The price is a premium over the company’s $46 close on Friday.

Rockwell (ROK) shares rose 13 percent to $40 and Raytheon (RTN.B) added 10 percent to $34.56 on the possibility that their aerospace units could be attractive to UTX or others.

GE, Honeywell and UTX are among the 30 components of the Dow Jones Industrial Average. See full story.

Earnings news

Dow component Minnesota, Mining & Manufacturing (MMM) posted third quarter earnings of $1.25 per share vs. $1.24 per share in a survey of analysts by First Call. The company said it expects to meet earnings expectations for the fourth quarter and for 2001. Shares jumped $3.13 to $90.38.

Dow component SBC Communications (SBC) earned 57 cents a share excluding items on revenue of $13.5 billion, a penny ahead of the First Call consensus estimates. The Baby Bell sees double-digit revenue growth and earnings growth in the “mid-teens” in 2001. Shares climbed $2.13 to $52.88.

Corning (GLW) reported third-quarter earnings of 35 cents per share vs. expectations of 34 cents a share. Revenue rose 54 percent over last year to $1.9 billion. The company forecast “strong revenue and earnings growth throughout 2001.” Shares dropped $6 to $99.94.

Also on the plate are a slew of earnings reports this week from Amazon.com (AMZN), Texaco (TX) and many others.

Sectors

Technology stocks turned higher after a slow start with semiconductor stocks ($SOX) in the lead.

The market’s volatile internet stocks ($GIN) and biotech sector ($BTK) were also higher. Among the few laggards early Monday: oil services ($OSX), down 1.4 percent.

Lucent fires CEO

Saying that it determined “an immediate change in leadership was necessary,” Lucent Technologies (LU) ousted Chief Executive Officer Richard McGinn. Henry Schacht, 66, who led the company from 1995-97, is returning temporarily.

The company also warned it expects pro forma revenue from continuing operations for the current quarter to decline about 7 percent and pro forma earnings per share from continuing operations to break even. It said it would report after the bell on Tuesday.

Shares of Lucent sank 31 cents to $22.32.

Other factors

Merck (MRK) added $3 to $84.88 after a rating upgrade from Salomon Smith Barney.

Ariba (ARBA) gained $5 to $134.75 after the Nasdaq said the business-to-business electronic commerce and network services company would join the Nasdaq 100 index on Oct. 27.

AT&T (T) continues to be in the spotlight as the communications giant’s board meets to mull over a plan to break itself up, according to published reports in The New York Times and The Wall Street Journal.

Ma Bell would re-establish itself under its most profitable unit, business services, and break off its broadband business, and struggling long distance services. It issued a tracking stock for its wireless unit (AWE) earlier this year.

The bond market was essentially flat, supported by nervousness about the Middle East and buffeted by flows in and out of stocks.