NEW YORK - Wall Street edged higher in choppy trading Monday, with investors making few moves as they waited for companies to start reporting their fourth-quarter earnings this week.
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With few firms issuing profit warnings and some forecasting year-over-year earnings growth as high as 20 percent, analysts expressed confidence that the market would continue its advance.
“There’s reason to be more optimistic than most people were after seeing that crummy jobs figure on Friday,” said Philip S. Dow, managing director of equity strategy at Dain Rauscher Wessels in Minneapolis. “Whenever business begins to come back, that’s not a recovery you measure in months, you measure it in years.”
The Dow Jones industrial average closed Monday up 26.29 points, or 0.2 percent, at 10,485.18, after gaining 0.5 percent last week.
The broader gauges were also higher.
The Nasdaq composite index, full of technology stocks, closed up 24.86 points, or 1.2 percent, at 2,111.78, after rising 4 percent last week. This was a new 2 1/2-year closing high for the Nasdaq, which last closed higher on July 3, 2001, when it stood at 2,140.80.
The Standard & Poor’s 500-stock index rose 5.37 points, or 0.5 percent, to 1,127.23, following a weekly gain of 1.2 percent.
The market was still digesting Friday’s employment data from the Labor Department, which said unemployment dropped to a 14-month low of 5.7 percent while payrolls increased by just 1,000 jobs, a sign that many have given up the search for work.
For the most part, though, investors were focused on the strong earnings outlook. But analysts also warned that some of the expected profit gains may already be reflected in stock prices, as companies have anticipated for some time that they would benefit from easy year-over-year comparisons.
It may be more difficult for them to best last year’s returns in future quarters, said Neil Massa, equity trader at John Hancock Funds.
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“In the short term, there’s no danger earnings will disappoint, it doesn’t look like interest rates will be hiked for a while, so that all bodes well,” Massa said. “However, I think we’re definitely in an overbought position, and bound to sell off a little bit. But I think the trend is still upward.”
SunTrust Banks Inc. closed down 19 cents at $70.78, despite issuing fourth-quarter earnings that exceeded the expectations of analysts. Other companies expected to report quarterly results this week include Delta Air Lines, General Electric Co., Apple Computer Inc. and Intel Corp.
Adecco SA, the world’s largest employment company, lost $5.23 to close at $11.70 after postponing publication of its audited 2003 results because of unresolved control and compliance issues.
Countrywide Financial Corp. closed down 86 cents at $71.18 after narrowing its outlook for the year and saying it expects quarterly earnings at the lower end of its forecast due to demand for less interest-rate sensitive products.
Computer Associates International Inc. lost 13 cents to close at $27.99 after announcing that regulators have alerted it to a possible enforcement action.
Merck & Co. declined $1.23 to $45.90 after brokerage firm Credit Suisse First Boston downgraded it, citing weak growth in its core domestic drug lines. Meanwhile, Bristol-Myers Squibb Co. gained 52 cents to close at $29.53 after CSFB upgraded its rating on recent product launches and advancing intermediate-term pipeline opportunities.
Also Monday, Nasdaq officials announced it will list the shares of six firms that trade on the New York Stock Exchange, including Hewlett-Packard Co., Charles Schwab Corp. and Walgreen Co., under a new dual-listing program. Analysts said dual listing will allow investors a greater chance to find the best price for a stock.
Advancers outnumbered decliners slightly more than 5 to 4 on the NYSE. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, closed up 7.81 points, or 1.4 percent, at 583.01.
Overseas, Japan’s financial markets were closed Monday for a national holiday, and were scheduled to reopen Tuesday.
In Europe, France’s CAC-40 declined 0.4 percent, Britain’s FTSE 100 closed down 0.4 percent and Germany’s DAX index shed 0.5 percent.
© 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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New York Stock Exchange 
The Dow Jones Industrial Average fell more than 280 points, Friday, to 13181.91, just two weeks after soaring to a historic record of 14,000. Two other major indexes, the Nasdaq and the Standard and Poor 500, fell more than 2% in a widespread market sell-off. 

Shares of Bear Stearns, the largest United States underwriter of mortgage bonds, fell 6.3% today, resulting from Standard and Poor's altering its outlook toward the company to "negative" from "stable". The investment banking firm recently saw two of its major hedge funds sink after exposure to the sub-prime mortgage decline. Standard and Poor's report said the firm may have problems, including its hedge funds, that could hurt the firm "for an extended period."

The company held a press conference at noon, but was unable to salvage its stock, leading to heavy losses in the rest of the financial sector. Chief Financial Officer Sam Molinaro remarked that the credit market was in the worst condition he had seen in 22 years.  

American Express shares fell 5.6%, while homebuilder Hovnanian Enterprises fell 9.4% in the sell-off which impacted all the indexes. 
American Home Mortgage Investment Corporation shares fell 52.07% in the session after announcing plans to close most operations and lay off over 6000 employees. The company has also lost its lending license in four states including New York.

"It is with great sadness that American Home has had to take this action," Chief Executive Michael Strauss said in a statement. "Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative."

Analysts say that the weakness in the stock markets and economy in general could prompt the Federal Reserve to lower interest rates, consequently allowing inflation to rise, but that it would also support stocks and ease borrowing. The Fed has not changed interest rates since June 2006.