Blue Chips End Higher

Stocks closed mostly higher Tuesday despite some downbeat earnings reports as investors appeared to look to a stronger economy in the second half.

Trading volume rose sharply from Monday’s levels as more investors jumped in.

The Dow Jones industrials rose 51.26 points, or 0.6%, to 8,402.36, and the Standard & Poor’s 500 gained 5.58 points, or 0.6%, to 890.81.

For both blue-chip indexes Tuesday’s closing levels were the highest since March 21, which marked the peak of the rally that occurred a week before the war in Iraq began.

Breaking through those March 21 closing levels -- 8,521.97 for the Dow and 895.79 for the S&P; index -- could lure more sidelined investors into the market, some analysts say.

The Nasdaq composite index, which rose 6.06 points, or 0.4%, to 1,391.01 on Tuesday, had been higher as recently as April 3.

The Dow had surged 147.69 points Monday amid some surprisingly strong first-quarter earnings reports from financial companies such as Fannie Mae and Bank of America.

On Tuesday, the market had to contend with disappointing reports from companies, including General Motors and Johnson & Johnson.

Rising stocks still outnumber losers by nearly 2 to 1 on the New York Stock Exchange and by 17 to 13 on Nasdaq.

“The majority of companies are going to meet or beat expectations” as they report quarterly results in coming days, Thomas Giles, director of research at Dean Investment Associates in Dayton, Ohio, told Bloomberg News.

“The economy is better than it was 15 months ago, but stocks are much lower,” making it a good time to buy, he said.

The market had struggled in recent weeks in part on concerns that first-quarter earnings would be hurt by a spending slowdown tied to investor uncertainties about the war in Iraq.

Even if results are depressed in the near term, the quick resolution of the war means the economy can expand at a faster rate in the second half, many Wall Street bulls say.

Investors mostly ignored Tuesday’s economic news. The Federal Reserve said industrial production fell in March by 0.5%, the weakest reading in three months.

European stock markets posted strong gains ahead of Wall Street’s opening. The German market surged 2.1% and the French market was up 1.6%. Japan’s main index rose 1.1% from a 20-year low.

U.S. stocks advanced even though crude oil futures prices rose for a third day. Near-term futures added 66 cents to $29.29 a barrel in New York, the highest price since April 1.

The Organization of the Petroleum Exporting Countries is expected to cut production at a meeting next week to compensate for a return of Iraqi oil to the world market.

In the Treasury bond market, yields pulled back even as stocks rose. The 10-year T-note yield ended at 3.99%, down from 4.02% on Monday.

This will be a short week for Wall Street: Markets will be closed Friday in observance of Good Friday.

Among Tuesday’s highlights:

* GM fell 95 cents to $35.17 after reporting higher first-quarter earnings but warning that it might not meet full-year estimates. Rival Ford Motor was off 14 cents to $8.35.

* Johnson & Johnson slumped $1.80 to $55.98. Its first-quarter earnings rose 13%, but investors were concerned about slowing sales of a key drug.

Other drug stocks were mixed. Merck rose 26 cents to $56.93 and Aventis gained 75 cents to $46.80, while Eli Lilly lost 43 cents to $59.07.

* On the plus side, many financial shares continued to advance on optimism about earnings. Bank of America rose 68 cents to $72.68 and Fannie Mae surged $1.61 to $73.10.

* Trucking stocks soared on surprisingly strong earnings from J.B. Hunt Transport Services. Hunt’s shares rocketed $3.60 to $32.66. Among rivals, Yellow jumped $1.76 to $27.01 and Roadway, which also reported strong quarterly results, gained $3.35 to $39.83.

* IBM rose $2.72 to $82.79 on the heels of its profit report issued Monday.

The tech sector overall was mixed Tuesday, but traders said it could be a strong area today, after relatively upbeat profit outlooks from Microsoft and Intel late Tuesday raised hopes.

* HCA, the biggest U.S. hospital chain, plunged $7.17 to $28.90 after reporting that first-quarter profit rose less than forecast because hospital admissions fell. Among competitors, Tenet Healthcare fell 65 cents to $15.30 while Health Management lost $1.79 to $17.60.

Market Roundup, C8-9