US stocks gain after nasty week

NEW YORK, (Reuters):

STOCKS HEADED higher in early morning trading yesterday as investors, clinging to hope that corporate scorecards could hint at a recovery in profits later in the year, tiptoed back into the market after last week's harsh sell-off.

Investors will be poring over Corporate America's financial reports as the second-quarter earnings season gathers speed this week. Stocks ended the first week of the third quarter on a grim note on Friday after profit warnings from technology companies hammered Wall Street.

"Today has been a little bit surprising, we have had some upside reaction - which very few people expected," said Alan Ackerman, executive vice president at brokerage Fahnestock & Co. "I think the real pop today is just that we went down so sharply on Friday. There is a bit of bargain hunting going on, but I think the mood remains extremely cautious."

The Nasdaq Composite Index gained 31.79 points, or 1.59 per cent, to 2,035.95. Internet gear giant Cisco Systems Inc., up 50 cents at US$17.29, and networking computer company Sun Microsystems Inc., up 68 cents at US$14.36, boosted the tech-packed index.

The blue-chip Dow Jones industrial average rose 40.33 points, or 0.39 per cent, to 10,293.01. AT&T Corp., which received an unsolicited US$44.5 billion bid from cable company Comcast Corp. for its broadband unit, led the blue-chip gauge higher with a US$2.23 jump to US$18.95.

The broader Standard & Poor's 500 Index was up 7.44 points, or 0.62 per cent, at 1,198.03.

Comcast, the No. 3 U.S. cable-television company, lost US$4.23 to US$38.05 and ranked as the most actively traded stock on the Nasdaq. Comcast said it made the offer for AT&T Broadband after months of talks with AT&T failed. AT&T said it had no plans to sell.

EMC Corp. rose 99 cents to US$22.59, recovering from a steep sell-off on Friday after the data-storage company warned earnings will fall as much as 76 per cent below estimates as cost-cutting failed to jump start demand. Bear Stearns said it maintained its "attractive" investment rating on EMC, saying company fundamentals should improve once the economy picks up steam.

NCR Corp., which makes computer systems for banks and retail stores, surrendered US$6.17 to US$38.60. The company warned its earnings and revenues will be lower than expected because its customers put off purchasing decisions in its data warehousing unit.

Biomet Inc., a maker of artificial knees, hips and other orthopedics, jumped US$1.13 to US$44.77. The company posted a 17 per cent rise in profits, meeting Wall Street expectations, amid rising demand from the nation's aging baby boomers.

Among technology companies issuing results this week are wireless giant Motorola Inc., Internet firm Yahoo Corp., both on Wednesday, and Web gear company Juniper Networks, on Thursday.

Optimists are hoping that interest rate cuts by the Federal Reserve this year will ultimately lift the slowing economy and corporate profits. The Fed has cut rates six times so far in 2001.

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