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Markets up ahead of earnings reports

Market close sees investors awaiting key reports from Big Blue and Intel, which release their statements after the bell.

Investors turned their attention to technology earnings Tuesday as they awaited key reports from IBM and Intel, which released their statements after the bell.

The Nasdaq composite index, up 25.76 points to close at 17.22, rose almost 2 percent, shaking off new anthrax scares and some bleak economic news. The Dow Jones industrial average gained 36.61 points to 9,384.23.

CNET's technology indexes were mixed.

One key company that reported quarterly results after Tuesday's closing bell was IBM, which reported a decline in earnings to 90 cents a share from $1.08 in the third-quarter report a year ago. Analysts predicted a decline to 89 cents a share. Shares fell 15 cents Tuesday to $101.85 before IBM released the report.

Intel also reported its third-quarter results after the markets closed. Earnings were down to 10 cents a share from 41 cents a share in last year's third quarter, as expected. Shares in the chipmaker were up 58 cents to $24.96 before results were released.

Among other companies reporting quarterly results after market close, Rambus rose 10 cents to $11.72, RealNetworks was up 19 cents to $6.00, and i2 Technologies rose 5 cents to $5.69.

But even as earnings season stepped into full swing, investors' attention was diverted by the developing news about anthrax cases and military action.

"Earnings season is beginning to blossom, but floor types wonder if the numbers matter given the radical change in environment," said UBS Warburg analyst Art Cashin, referring to traders on the trading floor. He observed that even investors in the mood for buying seem to hold out until some nonfinancial news drives stocks to a low point in the day.

Reports about new anthrax cases will likely continue to have an effect on the markets, though reactions have become more muted, Cashin said.

"Given extra time, floor brokers will speculate on anything--including mass psychology: Why was Monday's reaction to anthrax news more muted than Friday's action? Some felt it was due to realization that exposure, at present, seems treatable and contained," the analyst wrote in a report.

The most recent reported anthrax case is that of a 7-month-old baby of an ABC news producer in New York. Small amounts of the bacteria were also found in the mail-sorting facility of a U.S. Postal Service in Boca Raton, Fla., and 12 employees of the London Stock Exchange are being tested for anthrax following discovery of a suspicious package.

Producing and shopping
In other news, the Federal Reserve said industrial production fell for a twelfth straight month in September, its longest losing streak since World War II.

Output of the nation's factories, utilities and mines fell 1 percent in September, the biggest monthly drop since June. The last time there had been a similar unbroken series of declines came in a string that extended from November 1944 to October 1945, the Fed said.

Capacity utilization, which measures how much businesses are using their production capability, also fell. The Fed said the utilization rate fell to 75.5 percent, its lowest level since June 1983. Capacity utilization read 76.4 percent in August.

Weekly retail sales measures showed consumers cautiously returning to chain stores. Retail sales as measured by the Bank of Tokyo-Mitsubishi and UBS Warburg's Weekly Chain Store Sales Snapshot were flat in the week ended Oct. 13, compared with a 0.8 percent drop one week earlier.

Companies that reported earnings news Monday were active. Novellus Systems rose 90 cents to $32.54 after reporting Monday that third-quarter results were in line with lowered expectations and predicting fourth-quarter earnings per share of 11 cents, which is in line with analyst forecasts.

Unisys slipped 41 cents to $8.99. The seller of business computers and network-integration services said Monday that third-quarter profits plunged by 50 percent due to weakening demand. The company announced plans to cut 3,000 jobs and lowered its fourth-quarter outlook.

Among other actively traded shares, Cisco Systems rose 76 cents to $16.97; Oracle rose 50 cents to $14.94; and Microsoft gained 39 cents to $58.45.

Compaq Computer was up 38 cents to $10.18 and Hewlett-Packard was up 38 cents to $18.50 even as a major investor in both companies urged them to ditch their planned merger.

Cognizant shares rose $2.85, or 12 percent, to $26.85 after the information-technology outsourcing company--which is based in Teaneck, N.J., but does most of its business in Bangalore, India--beat estimates Tuesday. The earnings news supports talk that other Indian IT companies won't be as affected by skittishness after the Sept. 11 terrorist attacks.

AOL Time Warner was unchanged at $33.50. Yahoo rose 43 cents to $12.50, and was up 68 cents to $9.56.

Staff and Reuters contributed to this report.