NEW YORK - Stocks drifted higher Monday, brushing aside another record high for oil prices amid hopes the impending tide of third-quarter profit reports will override worries about a struggling economic recovery.
With no major economic or earnings data to steer market sentiment on Columbus Day, investors appeared to be betting that the quarterly reporting season might divert attention from Friday's disappointing employment report and rising fuel costs.
However, analysts were dubious the market could build much momentum on profit news alone without some resolution to the big question marks dogging the near-term outlook.
"The big troika here is economic data, oil and the election, and those things are keeping a stranglehold on the market," said David Legeay, investment strategist for McDonald Financial Group. "Barring anything to the extreme in earnings season, we're just in a market now that will move sideways and in concert with economics, whether jobs data or retail sales data" and energy prices.
Stocks managed to hold their modest gains even as oil futures pushed toward $54 a barrel. Contracts for next month's shipments rose 33 cents a barrel to $53.64 on the New York Mercantile Exchange as a strike began in Nigeria, Africa's largest exporter of crude, adding to supply concerns at a time of reduced output in the hurricane-ravaged Gulf of Mexico.
The Dow Jones industrial average rose 26.77, or 0.27 percent, to 10,081.97, a modest rebound after a drop of 1.35 percent last week.
Broader market measures also posted modest gains. The Nasdaq composite index rose 8.79, or 0.46 percent, to 1,928.76, at 1,928.36, while the S&P 500 index rose 2.25, or 0.20 percent, to 1,124.39.
Despite a spate of worrisome earnings previews over the past month, Wall Street expects the companies in the Standard & Poor's 500 to show at least a 10 percent increase in profits from a year ago, and the newly tempered outlook might enable most of the reports to top Wall Street forecasts.
But even with a strong showing, third-quarter profits are expect to come in lower than the second quarter's results, breaking a string of six straight quarters with improving profits.
"The stall in sequential earnings growth in Q3 has been accompanied by a stall in the equity market. We doubt that this is a coincidence," Ed Keon, chief investment strategist for Prudential Financial, said Monday in a note to investors. "We think that growth will be hard to come by for the next several quarters. ... Without much earnings growth and with valuations still higher than historical averages (although our valuations concerns are mitigated by low inflation and interest rates), we continue to think that the equity market will struggle for a while."
