Stocks mixed Friday on upbeat outlook from 3M, rumor of IBM warning

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Posted 3:07PM on Friday, April 5, 2002

NEW YORK - An upbeat outlook from 3M and lower prices brought buyers to Wall Street Friday and gave blue chips a strong boost. But investors again traded cautiously in the tech sector, sending shares down slightly on a rumor of a profit warning from IBM. Aside from 3M's good news, much of the market's buying was due to prices made more attractive by two weeks of selling on worries about first-quarter earnings, which companies are releasing this month, and the unrest in the Middle East. Tech stocks were also struggling due to expectations that the sector will take the longest time to recover. In midafternoon trading, the Dow was up 72.24, or 0.7 percent, at 10,307.41, after rising 36.88 Thursday to end a four-session, 228-point losing streak. The market's broader indexes were mixed. The tech-heavy Nasdaq composite index fell 6.40, or 0.4 percent, to 1,783.35, while the Standard & Poor's 500 index inched up 0.15, or 0.01 percent, to 1,126.49. "Basically, it is a defensive day ahead of a weekend when anything can happen in the Middle East," said Larry Wachtel, market analyst at Prudential Securities. The Dow's biggest gainer was 3M, which soared $7.49 to $121.61 after saying its first-quarter profit will be $1.20 a share, 9 cents higher than analysts' expectations. The company, which makes such products as Scotch tape, cited cost-cutting measures and job cuts. Additionally, Salomon Smith Barney and Credit Suisse First Boston each raised their ratings on the Dow industrial. Aluminum maker Alcoa, also a Dow stock, advanced $1.11 to $37.99 after reporting first-quarter earnings that met Wall Street's expectations. The beleaguered technology sector, pegged by analysts to be the last to eventually emerge from recession, declined. IBM, the weakest Dow industrial Friday, fell $2.09 to $98.75 on talk in the market that the company will issue an earnings warning. Intel stumbled 70 cents to $29.89. Wachtel, the Prudential analyst, confirmed that the rumor was going through but said he didn't believe it. However, IBM's decline indicates how jittery investors are feeling about the health of corporate earnings. Analysts doubt the market will make much or any upward progress until after companies have released their first-quarter results. "People are going to remain cautious for a while," said Brian Belski, fundamental market analysts for US Bancorp Piper Jaffray. "The proof is in the pudding, and investors have to see earnings for proof that companies are turning a profit and are improving." A mildly disappointing jobless report had little effect on the session. The Labor Department said Friday unemployment rose to 5.7 percent in March, an increase of 0.2 percentage points from the previous month. Economists anticipated a rise to at least 5.6 percent. Advancing issues outnumbered decliners 3 to 2 on the New York Stock Exchange. Volume was light at 741.20 million shares, below the 828.85 million traded at the same point Thursday. The Russell 2000 index, which tracks the performance of smaller company stocks, rose 1.71, or 0.3 percent, to 500.08. Overseas, Japan's Nikkei stock average closed Friday down 0.4 percent. In Europe, Germany's DAX index inched up 0.1 percent, France's CAC-40 declined 0.5 percent, and Britain's FT-SE 100 rose 0.5 percent. ------ On the Net: New York Stock Exchange: http://www.nyse.com Nasdaq Stock Market: http://www.nasdaq.com