After seeing considerable volatility in morning trading, stocks moved mostly higher over the course of the trading session on Tuesday. The markets benefited from a positive reaction to the latest batch of earnings news as well as the release of largely upbeat U.S. economic data.
The major averages moved roughly sideways going into the close, hovering firmly in positive territory. The Dow climbed 78.33 points or 0.6 percent to 12,805.54, the Nasdaq rose 13.10 points or 0.5 percent to 2,910.04 and the S&P 500 advanced 10.03 points or 0.7 percent to 1,363.67.
With earnings season starting to pick up steam, traders were presented a batch of quarterly results from well known companies such as Goldman Sachs (GS), Coca-Cola (KO), and Mattel (MAT).
Before the start of trading, Goldman Sachs reported second quarter adjusted earnings of $1.78 per share on revenues of $6.6 billion compared to analyst estimates for earnings of $1.12 per share on revenues of $6.4 billion. Shares of Goldman Sachs edged up by 0.3 percent on the news.
Coca-Cola and Mattel also reported better than expected second quarter results and rose by 1.6 percent and 9.7 percent, respectively.
The strength on Wall Street also came on the heels of some relatively upbeat economic data, including a report from the Federal Reserve showing a bigger than expected increase in industrial production in June.
The Fed said industrial production rose by 0.4 percent in June following a revised 0.2 percent decrease in May. Economists had expected production to increase by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month.
Jennifer Lee, senior economist at BMO Capital Markets, said, "Despite all of the worrying surveys of U.S. business confidence and surveys of regional and national manufacturing activity, the official data point to still-steady growth."
A separate report from the National Association of Home Builders showed a substantial improvement in homebuilder confidence in July, with the NAHB /Wells Fargo Housing Market Index jumping to a new five-year high.
The Labor Department also released a report showing that U.S. consumer prices came in unchanged in June, as a steep drop in energy prices was offset by higher prices for food, medical care, and apparel.
Traders also kept a close eye on Federal Reserve Chairman Ben Bernanke's testimony before the Senate Banking Committee.
In his prepared remarks, Bernanke reiterated that the central bank is prepared to take further action if the economy continues to struggle, but his remarks did not seem to indicate that further stimulus was imminent.
Peter Boockvar, managing director at Miller Tabak said, "Anyone thinking or hoping for something definitive from Bernanke about what the Fed will announce in two weeks at their next FOMC meeting didn't get any specifics."
In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Tuesday. Japan's Nikkei 225 Index ended the day up by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 1.8 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index crept up by 0.2 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.6 percent.
In the bond market, treasuries gave back some ground after trending higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.7 basis points to 1.501 percent, bouncing off a record closing low.
Chemical stocks showed a strong move to the upside over the course of the trading day, driving the Dow Jones Chemicals Index up by 1.7 percent. PPG Industries (PPG), FMC Corp. (FMC) and DuPont (DD) turned in some of the sector's best performances.
Significant strength also emerged among oil service stocks, which moved higher along with the price of crude oil. With crude for August delivery climbing $0.79 to $89.22 a barrel, the Philadelphia Oil Service Index advanced by 1.3 percent.
Telecom, pharmaceutical, and banking stock also saw considerable strength on the day, moving higher along with most of the major sectors.
On the other hand, substantial weakness remained visible among trucking stocks, as reflected by the 2.7 percent loss posted by the Dow Jones Trucking Index. J. B. Hunt (JBHT) helped to lead the sector lower after reporting weaker than expected second quarter revenues.
Bernanke's second day of testimony on Capitol Hill is likely to attract some attention on Wednesday along with the Fed's Beige Book report and a Commerce Department report on housing starts.
Trading could also be impacted by reaction to quarterly results from Intel (INTC) and Yahoo (YHOO), which have released their quarterly results after the close of today's trading.
Additionally, Bank of America (BAC) and Honeywell (HON) are among the companies due to release their quarterly results before the start of trading on Wednesday.
by RTT Staff Writer
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