Wall Street rebounded on Tuesday, bolstered by strong corporate results and renewed hope for an agreement in Washington that would avert a default on U.S. debt. Hit the jump to read the rest of the story.
Strong quarterly numbers from technology bellwether International Business Machines Corp and beverage giant Coca-Cola boosted technology and consumer shares in the first heavy week of second-quarter results. IBM gained nearly 5 percent, leading the Dow’s gainers.
Markets surged after President Obama suggested progress was being made toward a deficit reduction deal. The White House and Congress need to sign a deal that includes an increase in the federal debt ceiling by August 2 or the United States could default on its debt.
“Stocks are starting to bounce at least for the time being, with people wagering that there will be a resolution on the debt ceiling,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
The S&P information technology sector <.GSPT> gained 2.5 percent, making it the top gainer among S&P sectors. Shares of Apple hit a 52-week high ahead of its report due after the closing bell.
All 10 S&P 500 sectors rose on Tuesday, even shares of financials, which were hit by declines in Goldman Sachs Group Inc and Bank of America following their results. After advancing in the morning, Bank of America shares fell 2 percent to $9.53, while Goldman declined 1.8 percent to $126.97.
Wells Fargo shares jumped 5.5 percent, the biggest gain on the S&P financials index, after the bank said its profit rose 30 percent.
“We’ve kicked off with strong earnings from IBM, which showed broad strength across different segments and geographies,” said Ed Crotty, chief investment officer at Davidson Investment Advisors in Great Falls, Montana. “As we get into earnings season, that tends to take center stage.”
The Dow Jones industrial average <.DJI> was up 210.10 points, or 1.70 percent, at 12,595.26. The Standard & Poor’s 500 Index <.SPX> was up 21.38 points, or 1.64 percent, at 1,326.82. The Nasdaq Composite Index <.IXIC> was up 57.84 points, or 2.09 percent, at 2,822.95.
Housing starts hit a six-month high in June, and permits for future construction rose. Homebuilder D.R. Horton Inc climbed 5.1 percent to $11.87 and the PHLX Housing Index <.HGX> rose 2.3 percent.
Goldman’s second-quarter net income fell short of lowered expectations as fixed income trading revenue dropped sharply. Bank of America recorded a second-quarter net loss of $8.8 billion.
Coca-Cola Co posted slightly higher-than-expected profit. Johnson & Johnson’s earnings topped estimates on a turnaround in its prescription medicines and stabilizing sales of over-the-counter medicines.
Coke rose 3.7 percent to $69.63, while J&J was 1.3 percent lower at $66.25. Johnson & Johnson’s higher-than-earnings were mainly attributed to lower taxes and the weak dollar.