Earnings Still Market's Focus

WALL STREET JOURNAL ONLINE

NEWS ROUNDUP

Stocks turned around on Wednesday after an early dip, following a similar pattern to the previous day's trading when enthusiasm about the financial sector overcame a set of sour earnings reports from several major companies.

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The Dow Jones Industrial Average was higher by about 38 points after an early decline of more than 50 points. Other major indexes also reversed after early drops -- the S&P 500 was up 0.5% and the Nasdaq Composite Index rose 1.2%.

Stocks bounced on Tuesday, led by financials, after Treasury Secretary Timothy Geithner said that the vast majority of banks had more than enough capital, easing some fear about the results of the government's stress tests of top lenders. Wednesday, Mr. Geithner said at a speaking engagement that he would welcome strong banks repaying bailout funds to the government.

Earnings news in the financial sector was again far from upbeat. Wall Street giant Morgan Stanley reported a first-quarter loss and said it plans to cut its dividend by 81% to five cents a share. Its shares declined more than 6%.

Wells Fargo meanwhile reported that its net income jumped 52% in the first quarter thanks to its acquisition of troubled lender Wachovia. But the bank also boosted its credit reserves by $1.3 billion in anticipation of higher losses from its consumer-credit and real-estate portfolios. Its shares rose about 6%.

Results in other sectors were mostly grim, but the reaction from investors was mixed. Aerospace giant Boeing reported sharply lower first-quarter earnings and cut its forecast for the remainder of the year, but its shares rose 3%. GlaxoSmithKline said that its first-quarter net fell 13% amid lower sales of prescription drugs. Its shares fell by about 4%. AT&T shares advanced 4% as its 9% fall in earnings was better than Wall Street had expected.

In the tech sector, Yahoo rose 4% as the online search firm reported a 78% profit drop and said it would cut 5% of its work force. Sandisk climbed 12% after a narrower-than-forecast loss for the memory-chip maker. After the close of trade, from Apple and eBay report results. They both traded higher in recent action.

Oil futures were flat ahead of weekly energy inventories data. The dollar fell against the yen and the euro. Treasurys were little-changed.

Asian stocks made slight gains, with the Nikkei 225 up 0.2% in Tokyo. In Europe, stocks were weaker.