Stocks drifted higher Monday in a fourth consecutive listless session. Traders waited for Alcoa to report its quarterly financial results so they could look for clues about the economy.
Alcoa stock leaped 3 percent, the best performer of the 30 stocks in the Dow Jones industrial average, after falling 2.1 percent Friday. Alcoa was to report its results after the market closed.
The company, which makes aluminum, is seen as an economic bellwether because so many industries use its products. At least one analyst expects Alcoa to lose money for the first time since the recession ended two and a half years ago.
The Dow was up 24 points, or 0.2 percent, at 12,384 just before 3:30 p.m. EST. The broader Standard & Poor’s 500 index was up two points at 1,2809. The Nasdaq was up five at 2,679.
U.S. stocks opened the year with big gains but have performed sleepily since then. The S&P rose 19 points Jan. 3, then rose or fell by less than four points each of the following three days.
Analysts think profit growth slowed for U.S. multinational companies from October through December because of weaker demand overseas. Europe is on the brink of recession, and China’s explosive economy is cooling.
Alcoa unofficially kicks off earnings season on Wall Street. Traders will watch other companies that report later for further signals about the health of the economy.
Quarterly profits for companies in the S&P 500 will probably only grow at half the rate of the previous three quarters, said Sam Stovall, chief equity strategist at S&P’s Capital IQ. They generate about half their revenue overseas, he said.
The U.S. is in a “half-speed recovery, and that probably isn’t enough to offset the weakness in Europe and Asia,” Stovall said.
Many analysts expect materials companies such as Alcoa to suffer as developing nations expand more slowly. Government-funded construction booms have driven up prices for metals and other basic products.
“China, India, Latin America — that’s where those companies have been really driving sales in the last few quarters,” said John Butters, senior earnings analyst at FactSet, a provider of financial data.
He said investors should pay close attention to what companies say about their overseas sales for clues to their future performance.
Analysts with S&P Capital IQ took a brighter view. They said in a note to clients that rising prices for steel, gases and chemicals will help offset declining global demand.
Another reason to expect slower profit growth: The results for the last three months of 2011 will be compared with the last three months of 2010, which are not as easy to improve on as results from earlier in 2010.
In early 2010, the U.S. was just emerging from its deepest recession in decades. Changes in the economy since late 2010 have been less dramatic, so the comparisons are more challenging, Butters said.
European markets closed lower Monday. French and German leaders met to craft the regional fiscal treaty that they agreed to pursue last year. It was their first crisis summit of the year.
The treaty would strengthen oversight of spending by the 17 countries that use the euro. Excessive borrowing by nations such as Greece and Italy has hurt the European economy, including stronger nations such as Germany and France.
In other corporate news:
— Netflix Inc. stock rose $11.60, more than 13 percent, to $97.89. The company said it was expanding into Britain and Ireland. The stock is up 28 percent so far this year, best in the S&P 500. Netflix traded above $300 last summer, then plunged to $62 after it raised prices and tried to separate its online-streaming business from its DVD-by-mail business, resulting in a customer uproar.
— CareFusion Corp. plunged 8.3 percent, the most in the S&P 500. The company, which makes medical equipment, announced preliminary results that were weaker than analysts had expected.
— Inhibitex Inc., which makes medicine to treat hepatitis C, soared 141 percent after Bristol-Myers Squibb Co. said over the weekend that it would buy the company for $2.5 billion. Other developers of hepatitis C treatments followed the rally. Idenix Pharmaceuticals Inc. jumped 41.4 percent, and Achillion Pharmaceuticals Inc. added 21 percent.
Follow Daniel Wagner at www.twitter.com/wagnerreports.