Stocks close higher after day of choppy trading

NEW YORK — Wall Street extended its October winning streak into a fifth day today, although trading was erratic as investors shied away from big commitments in advance of third-quarter earnings.

Analysts said investors were likely to remain cautious as economic news trickles in, and they warned that the market could become volatile if company results hold many negative surprises.

"I think we're going to have a choppy market here for a while as the earnings come out," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "But the tone of the market is still optimistic ... we could see a continuation of the positive trend."

According to preliminary calculations, the Dow Jones industrial average closed up 59.63, or 0.6 percent, at 9,654.61, after recovering from midday losses.

The broader market also reversed course to close higher. The Nasdaq composite index rose 14.39, or 0.8 percent, to close at 1,907.85. The Standard & Poor's 500 index rose 4.90, or 0.5 percent, to close at 1,039.25.

Trading was understandably quiet as many investors were waiting for third-quarter earnings. Companies were beginning to report results this week, starting with Alcoa Inc. after the close of markets today and Yahoo! Inc. on Wednesday. Many analysts believe earnings will have to not only meet, but exceed, estimates for stocks to move higher after six months of gains.

After the close of trading, Alcoa, the nation's largest aluminum manufacturer, said its earnings had risen 45 percent, beating analyst expectations by 4 cents a share.

Investors were pleased with the news. Alcoa rose 96 cents in after-hours trading, after losing 8 cents to close at $28.19 in regular dealings.

Few companies have issued earnings warnings, which bodes well for the market during the next few weeks of third-quarter reports, said Neil Massa, an equity trader at John Hancock Funds. The lack of news hasn't exactly enticed investors, but low trading volume is normal for a time like this, he said.

"I don't think there's any worry here, people are just taking some money off the table, and that's a natural progression, not a fundamental shift in sentiment," Massa said.

Investors are wary, but it's not because they don't believe there's a recovery under way, said Arnie Holzer, senior investment strategist at Deutsche Asset Management Americas. "They're just waiting to see that it is self-sustaining," he said.