Stocks move up on solid earnings reports

By Herbert Lash

NEW YORK (Reuters) - Technology stocks rose on Wednesday as investors took heart from solid corporate earnings and shrugged off fresh evidence of a dismal housing sector, which renewed speculation the Fed will cut interest rates.

U.S. home construction starts fell in September to their lowest level in more than 14 years, the Commerce Department said. The data lifted bonds but pushed the U.S. dollar lower on concerns the housing market may drag on the U.S. economy.

Oil marched to a new all-time high near $89 a barrel as investors fretted that Turkey may launch a major military incursion into northern Iraq and a potential supply crunch this winter.

Stronger-than-expected profits from Intel Corp (INTC.O), Yahoo Inc (YHOO.O) and JPMorgan Chase & Co (JPM.N) eased worries about the outlook for earnings. Intel and Yahoo forecast continued growth, and several brokerages raised their price targets on the two technology bellwethers .

"So far we've got positive surprises coming in on earnings," said Michael Darda, chief economist at MKM Partners LLC, in Greenwich, Connecticut. "The expectation is that there's a bounce back in the fourth-quarter, and we're back to double-digit year-over-year earnings comparisons."

The Standard & Poor's 500 Index .SPX was flat at 1538.52 and the tech-heavy Nasdaq Composite Index .IXIC was up 20.33 points, or 0.7 percent, at 2,784.11.

The Dow Jones industrial average .DJI, however, was down 16.66 points, or 0.12 percent, at 13,895.75, pulled lower by a disappointing outlook from United Technologies Corp (UTX.N) and lackluster hardware sales from IBM (IBM.N).

In Europe, Britain's leading blue-chip index reversed early losses to move higher as brewers Carlsberg (CARLb.CO) and Heineken (HEIN.AS) said they were considering a cash bid for Scottish and Newcastle SCTN.L.

European shares closed higher as the generally upbeat U.S. results underpinned appetite for financials and technology stocks in Europe.

The FTSEurofirst 300 index .FTEU3 ended unofficially up 0.5 percent at 1,583.69.

The mood in Japan was gloomy. The Nikkei average fell to a two-week low as financial stocks such as Sumitomo Mitsui Financial Group Inc (8316.T) continued to weigh. The benchmark Nikkei average ended down 1.1 percent, or 182.61 points, at 16,955.31, the lowest close since Oct 1.

FEAR FACTOR

Treasury bond prices rose on the potential for the sagging housing sector to weigh broadly on U.S. economic growth and lead to an interest rate cut when Federal Reserve policy-makers meet on October 30-31, strategists said.

"The fear factor is back in the market," said Andrew Richman, managing director of SunTrust's personal asset management division, based in West Palm Beach, Florida.

"The jury is still out (on) how far housing is going to bleed into the rest of the economy, and whether the credit crunch is done yet," Richman said.