(Updates to early afternoon)
By Kristina Cooke
NEW YORK, Jan 14 (Reuters) - U.S. stocks rebounded on
Monday from last week's losses after IBM <IBM.N> reported
higher-than-expected preliminary quarterly earnings, spurring a
broad rally in technology shares.
The surprise report ahead of International Business
Machines Corp's scheduled earnings release on Thursday eased
some investor concerns over how much the slowing U.S. economy
will cut into technology profits.
IBM's shares rose 5.7 percent to $103.23 and lifted other
blue-chip tech stocks, including microchip maker Intel Corp
<INTC.O>, up 4.1 percent at $22.88 and computer-maker
Hewlett-Packard <HPQ.N> up 2.5 percent to $46.14.
The encouraging earnings assessment struck a positive note
in a week of crucial earnings reports that will include major
banks battered by subprime losses, including Citigroup Inc
<C.N> and Merrill Lynch & Co Inc <MER.N>.
"The earnings picture provided by IBM is very positive,"
said Sam Rahman, portfolio manager at Baring Asset Management
Inc. in Boston.
But while this may remove some of the concerns about the
sector, "it's just one company and there are a lot more
earnings to come," he said.
The Dow Jones industrial average <> was up 130.55
points, or 1.04 percent, at 12,736.85. The Standard & Poor's
500 Index <.SPX> was up 8.70 points, or 0.62 percent, at
1,409.72. The Nasdaq Composite Index <> was up 24.40
points, or 1.00 percent, at 2,464.34.
Adding to the market optimism on Monday, Credit Suisse
raised U.S. stocks to "overweight" for the first time this
decade, saying the United States has historically outperformed
when leading economic indicators fall "because the speed of
macro and corporate policy response is best there."
Apple Inc's <AAPL.O> shares rose 2.4 percent to $176.77,
and were the biggest boost to the Nasdaq, a day before its
annual Macworld event in San Francisco. The event is the
favorite venue of Apple Chief Executive Steve Jobs to roll out
new products and chart the company's course for the year.
Financial stocks remained in the spotlight, with CNBC
reporting Citigroup could take write-downs as high as $24
billion. Citigroup and Merrill have been mentioned in news
reports as seeking more cash from sovereign funds and other
wealthy investors as they face heavy losses. For details, see
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Two of the largest banks in the eastern United States, M&T
Bank Corp <MTB.N> and Sovereign Bancorp Inc <SOV.N>, said
turmoil in credit, mortgage and real estate markets hurt
fourth-quarter results. M&T Bank shares fell 2 percent to
$72.32 and Sovereign lost 3 percent to $10.34.
[].
Retailers were under pressure after Sears Holdings Corp
<SHLD.O> said sales fell during the key holiday period, sending
Sears shares down 6 percent to $90.42.
Also weighing on retailers were price target cuts on more
than a dozen stocks by Goldman Sachs, including Coach Inc
<COH.N>, Tiffany & Co <TIF.N> and Costco Wholesale Corp
<COST.O>. Coach shares were down 5.8 percent at $25.29, Tiffany
shares fell 4.9 percent to $34.06 and Costco dropped 3.1
percent to $64.40.
Health stocks, which are the best-performing group so far
in 2008, were down after drug makers Merck & Co <MRK.N> and
Schering-Plough Corp <SGP.N> said a closely watched study
involving its joint cholesterol treatment, Vytorin, failed to
meet its goal. Schering shares fell 6.3 percent to $25.98 and
Merck's stock lost 2.1 percent to $59.28.
Stocks suffered a third straight weekly loss last week. The
S&P 500's year-to-date drop of 4.6 percent was the fourth-worst
start in the history of the Standard & Poor's benchmark.
(Editing by Kenneth Barry)
