Wall Street opened modestly higher this afternoon as investors re-entered the market in search of value following Friday’s brief sell-off.

Sentiment was bolstered by better-than-expected quarterly results from US newspaper publisher Gannett and Eaton Corp, a manufacturer of circuit breakers and fuel pumps.

Gannett’s shares advanced 1.8% to $13.23 after it unveiled third-quarter earnings of 44 cents a share (excluding certain one-off items), beating its own forecasts of 39 cents to 42 cents a share.

The publisher of USA Today reported an overall net income of $73.8 million, or 31 cents a share, in the third quarter, representing a 53% plunge from the prior year’s comparative of $158.1 million. Third-quarter revenues, meanwhile, slumped 18% to $1.34 billion.

Although weaker, the company’s quarterly results were pointing to some sort of turnaround; revenues generated from newspaper advertisements fell 28% in the third quarter after sliding 34% and 32% in the first two quarters.

Eaton Corp was also in the limelight after reporting a net income of $193 million, or $1.14 a share in the third quarter. Although this was 39% lower than last year’s comparative of $315 million, its third-quarter earnings (excluding one-off items) of $1.21 a share beat Bloomberg’s median analyst estimate of 95 cents by 27%.

The company also raised its full-year profit target (excluding special items) to $2.40 to $2.50 a share, up from earlier forecasts of $2 to $2.20 a share and Bloomberg’s average analyst estimate of $1.99 a share.

‘We’ll have lots of earnings reports this week,’ said Tom Wirth of Chemung Canal Trust. ‘The trend so far has been positive and there’s expectation that will continue. That’s positive for stocks. It’s very possible that we will near 1200 on the S&P 500 by the end of the year.’ [1]

By 3.30pm (London time) the Dow Jones Industrial Average was 43.76 points (+0.44%) higher at 10039.67 while the broader S&P 500 was 4.2 points (+0.40%) above its previous close at 1091.88.

US mining companies were in demand this afternoon following further gains in underlying metal prices – copper, nickel, silver and gold all gained after the Bank of Japan said its economy, the world’s second-biggest, was rebounding.

Aluminium producer Alcoa added 1% to $14.19 and Freeport McMoRan Copper & Gold climbed 2.4% to $77.53.

Elsewhere, low-fare airline AirTran Holdings jumped 5% to $5.37 after JPMorgan raised its recommendation on the company’s shares from ‘neutral’ to ‘overweight’. It also upped its price target from $9.5 to $11, citing lower costs, higher profits, better liquidity and a cheaper valuation. [2]

Finally, it is important to note that Apple is releasing fourth-quarter results at the end of the closing bell today. Analysts at Broadpoint believe that Apple may have to deliver quarterly earnings of at least $1.60 a share to push the stock higher. [3]

[1] Source: Bloomberg News (19 October 2009)
[2] Source: Bloomberg News (19 October 2009)
[3] Source: Bloomberg News (19 October 2009)

By Anthony Grech, Research Analyst, IG Index.

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