Stocks Rise as Earnings Beat Views

Investors found a fresh appetite for stocks Monday after a handful of earnings reports revived hopes that the economy is improving.

Industrial equipment maker Eaton Corp. said it was seeing improvement in key markets and raised its full-year profit forecast. Newspaper publisher Gannett Co. managed to post a profit despite a sharp fall in revenue, and toymaker Hasbro Inc.‘s income rose on cost cuts.

As earnings reporting gets into full swing this week, investors are relieved to see better results in a broad range of industries following some downbeat news last week from major banks, which reported deepening loan delinquencies as consumers and businesses continue to struggle with paying off their debts.

Technology earnings have come in relatively well so far, with solid reports last week from Google Inc. and leading chipmaker Intel Corp. The market will get a chance to see if that trend will continue after the market closes Monday with reports from Apple Inc. and Texas Instruments Inc.

Burt White, chief investment officer at LPL Financial in Boston, noted that three of every four companies so far has topped analysts’ expectations for earnings in the July-September quarter. White says that’s a sign that the economy is doing better than most investors had predicted.

“The recovery is moving faster than analysts can sharpen their pencils and revise their estimates upward,” he said.

In midday trading, the Dow Jones industrial average rose 106.03, or 1.1 percent, to 10,101.94, its highest level since Oct. 7 last year.

The broader Standard & Poor’s 500 index rose 10.71, or 1.0 percent, to 1,098.39 and neared the 1,100 mark for the first time in a year.

The Nasdaq composite index rose 21.32, or 1.0 percent, to 2,178.12.

Bond prices mostly fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.43 percent from 3.42 percent late Friday.

Disappointing earnings from Citigroup Inc. and Bank of America Inc. chilled some of investors’ optimism last week. Their results showed that loan losses remain high meaning consumers and businesses are having trouble paying their bills.

The dollar mostly fell against other major currencies, while gold prices rose. The drop in the dollar lifted prices of commodities. The weaker greenback makes commodities more attractive to foreign investors.

Light, sweet crude rose 42 cents to $78.95 per barrel on the New York Mercantile Exchange.

Among companies posting earnings, Eaton rose $4.31, or 7.1 percent, to $64.73, while Gannett advanced 90 cents, or 6.9 percent, to $13.90. Hasbro fell 83 cents, or 2.8 percent, to $28.69.

Apple rose 28 cents to $188.33 ahead of its quarterly report. Texas Instruments rose 67 cents, or 3 percent, to $23.42.

About four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 412.9 million shares compared with 579.7 million traded at the same point Friday. Trading was heavy at the end of last week because of the expiration of options contracts.

The Russell 2000 index of smaller companies rose 7.90, or 1.3 percent, to 624.08.

Overseas, Japan’s Nikkei stock average fell 0.2 percent. In afternoon trading, Britain’s FTSE 100 rose 1.6 percent, Germany’s DAX index rose 1.8 percent, and France’s CAC-40 advanced 1.6 percent.

10/19/2009 12:15 PM IEVA M. AUGSTUMS, TIM PARADIS,AP Business Writers NEW YORK