US stocks headed toward their first weekly gain in three, as some investors bet the economy and corporate profits will rebound in the first half of the year.
Minnesota Mining & Manufacturing Co lifted the Dow Jones Industrial Average on Friday while Georgia-Pacific Corp helped boost the Standard & Poor's 500 Index as concern about their asbestos liability subsided.
The NASDAQ Composite Index fell after software maker PeopleSoft Inc and electronics manufacturer Sanmina-SCI Corp said sales aren't yet picking up.
"There have been a whole bunch of companies that did better than expected" last quarter, said Michelle Clayman, who manages US$1.4 billion as chief executive of New Amsterdam Partners. "It's only in technology we're seeing really horrible earnings."
The Dow advanced 53.12, or 0.6 percent, to 9,850.19. The S&P 500 rose 2.09, or 0.2 percent to 1,134.24. The NASDAQ fell 1.24, or 0.1 percent, to 1,941.34, after swinging between gains and losses.
For the week, the Dow climbed 0.8 percent, the S&P 500 rose 0.6 percent, and the NASDAQ added 0.6 percent. Benchmark indexes last posted weekly gains at the beginning of the month.
This week's gains follow a decline that began in early January as investors grew concerned stocks had climbed too far on the expectation an economic recovery was coming.
"The market had been up a tremendous amount and then we started getting fourth-quarter numbers," said Clayman. Reports and forecasts from technology companies, in particular, prompted a sell-off that lasted until this week.
Clayman cited consumer products maker Kimberly-Clark Corp and student loan purchaser USA Education Inc as examples of companies that have reported better-than-expected profits.
Some traders and investors said disappointing forecasts from technology companies are having a surprisingly small effect on the market as a whole.
The NASDAQ has lost 0.4 percent this year. The S&P 500 has dropped 1.2 percent and the Dow has shed 1.7 percent.
"For all the bad news we've endured in the last month, we've held up pretty well," said Brian Pears, head of equity trading at Victory Capital Management in Cleveland.
"The market reflects what we've seen in the economy," Pears said. While the recession doesn't appear to be deepening, "there also haven't been the one or two solid pieces of economic information that we need before going higher."
More than half the companies in the S&P 500 have reported earnings for the fourth-quarter of last year. Fifty-eight percent of those, including Amazon.com Inc, Lucent Technologies Inc and Johnson & Johnson, beat analyst forecasts.
Some 1.1 million shares traded on the New York Stock Exchange by 3pm, close to the level of a week ago. About the same number of stocks rose as fell on the Big Board.
Georgia Pacific, the second-biggest forest-products company, rose US$1.90, or 8.7 percent, to US$23.65, after the company said a new US$221 million reserve would be sufficient to cover any costs related to asbestos that are not covered by insurance. Concern that it faced a bigger liability cut the stock by as much as 23 percent in the past two months.
Asbestos scare
Other stocks that have fallen because of asbestos also climbed. 3M gained US$2.72 to US$112.18, leading the Dow's advance.
Halliburton Co rose US$1.06 to US$14.48.
Halliburton's payouts for asbestos claims over the last 25 years come to less than one quarterly dividend payment, said Ole Slorer, a Morgan Stanley Dean Witter & Co analyst.
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