Stocks Gain on Earnings Reports

Stocks rallied Friday after solid earnings reports from network gear maker Juniper Networks and industrial conglomerate General Electric helped lift investors’ hopes for robust results from corporate America in coming weeks.

Energy stocks helped fuel the market rise as oil prices jumped 5%, closing above $35 for the first time since March 14 as subzero temperatures in the Northeast threatened to strain already low U.S. fuel stocks.

The dollar, meanwhile, notched its biggest one-day gain against the euro in five months after Treasury data showed that foreigners invested more heavily in U.S. assets than expected.

Wall Street is bracing for a rush of earnings reports in the next two weeks, when more than half the companies in the Standard & Poor’s 500 index will issue their corporate scorecards.

“If the first week is any precursor, then I think the earnings season is going to be nothing short of fantastic,” said Arthur Hogan, chief market analyst at Jefferies & Co.

Solid economic data also underpinned sentiment after a report showed consumer sentiment jumped in early January to its highest level in more than three years as stock indexes rose and job seekers felt more confident.

The Nasdaq composite index rose 31.38 points, or 1.5%, to 2,140.46, hitting its highest level since July 3, 2001. The S&P; 500 index gained 7.78 points, or 0.7%, to 1,139.83, its highest close since April 1, 2002. And the Dow Jones industrial average rose 46.66 points, or 0.4%, to 10,600.51, its highest close since March 19, 2002.

Winners led losers by 7 to 5 on the New York Stock Exchange and by almost 2 to 1 on Nasdaq in heavy trading.

For the week, the Dow rose 1.4%, Nasdaq rose 2.6%, and the S&P; 500 rose 1.6%. The Dow and the S&P; 500 both have racked up eight straight weeks of gains, while Nasdaq wrapped up its sixth in a row. It’s the S&P; 500’s longest weekly winning streak since March 1998.

Sunnyvale, Calif.-based Juniper, the No. 2 maker of networking gear, jumped $7, or 30.5%, to $29.93. The company said quarterly net profit and sales rose, topping expectations. Juniper also forecast sales and earnings in its current first quarter that would top analysts’ targets.

Rival telecom equipment maker Lucent Technologies rose 14 cents to $4.61, and the Amex index of networking stocks jumped 8.6% to a 52-week high.

GE rose $1.35 to $33.35 and helped lead the Dow higher. The industrial conglomerate said quarterly earnings surged 47% on a turnaround at its reinsurance unit.

But Johnson & Johnson slumped $1.39 to $50.45 and weighed on the Dow. Several brokerage firms issued reports predicting dramatic declines in the drug maker’s revenue.

In economic news, the University of Michigan’s consumer sentiment index rose to 103.2 in early January from 92.5 in December.

Other economic reports, however, were not as upbeat. The output of American factories, mines and utilities rose 0.1% in December, the Federal Reserve said. That was less than expected, and the report could renew concerns over the factory sector’s recovery.

Inventories at U.S. businesses climbed slightly more than expected in November but failed to keep up with the faster sales pace, a separate government report showed, suggesting companies may need to refill shelves to keep up with demand.

Crude oil for February delivery gained $1.63, or 4.9%, to $35.07 a barrel in New York. Heating oil and gasoline prices leapt 5.4% and 6.7%, respectively.

Oil shares rose along with crude prices. A key index of oil service stocks gained 2.2%, led by Transocean, up $1.23 to $25.41, and Schlumberger, which added $1.20 to $53.89.

The dollar rallied after the Treasury said net foreign purchases of U.S. assets jumped to $87.6 billion in November, sharply higher than a revised $27.8 billion in October. The consumer sentiment report also helped the dollar. The euro closed at $1.238, down from $1.258 on Thursday.

For the week, the euro lost 3.6% against the dollar, its first weekly decline against the greenback in 10 weeks.