Strong Earnings Send Stocks Higher
Stronger earnings from U.S. companies powered the Standard & Poor's 500 index past 1,400 for the first time in three months.
The S&P 500 index rose 12 points to 1,406 at around 1 pm on Tuesday. Energy stocks increased the most of the 10 industry groups tracked by the index.
The technology-heavy Nasdaq index was headed for a milestone of its own: its first close above 3,000 since early May. At around 1 pm, the index was up 37 points at 3,026.
The Dow Jones industrial average rose 83 points to 13,200. The S&P hasn't closed above 1,400 since May 2, and the Nasdaq hasn't closed above 3,000 since May 3.
"There's been a bunch of positive earnings numbers," said Stephen Carl, head of equity trading at The Williams Capital Group. "While that makes some investors happy, I'd like to see some more robust growth."
Energy companies rose broadly after Chesapeake Energy reported that its income doubled in the second quarter. Revenue from oil, natural gas and natural gas liquids rose. Chesapeake's stock soared $1.88 to $19.64. Cabot Oil & Gas also jumped $2.13 to $42.92 and Occidental Petroleum rose $2.74 to $91.
Chesapeake was the latest major U.S. company to turn in a stronger earnings report. Of the 407 companies in S&P 500 that have reported earnings through Monday, 65 percent beat Wall Street's expectations, according to S&P Capital IQ. More than 40 percent have reported double-digit growth.
On Tuesday, accessories maker Fossil reported that its second-quarter net income climbed 12 percent thanks to growing demand in Asia and strong watch sales. The performance topped analysts' estimates, and the stock popped $22.04, or 32 percent, to $91.83, the biggest gain in the S&P 500 index.
MGM Resorts International reported a 29 percent surge in revenue even though the casino company had a quarterly loss. The stock rose 85 cents, or 9 percent, to $10.23. Disney, Priceline and Express Scripts will all report earnings after the closing bell.
Also Tuesday, the Labor Department said U.S. employers posted the most job openings in four years in June, a positive sign that hiring may pick up. Layoffs also fell. The data follow Friday's report that said U.S. employers in July added the most jobs in five months, far more than economists were expecting.
All the positive news on the economy caused investors to cut their holdings of safer assets like U.S. Treasurys. Yields on the bonds rose as investors sold them. The yield on the benchmark 10-year Treasury note rose to 1.63 percent from 1.56 late Monday.
The Federal Reserve is expected to report later Tuesday that U.S. consumers likely took on more debt in June, even as they kept spending in check. More borrowing is generally viewed as a healthy sign for the economy. It suggests consumers are gaining confidence and growing more comfortable taking on debt.
In Europe, most markets rose, despite news that Italy's recession deepened in the April through June period. Italy's economy shrank for the fourth quarter in a row. Benchmark stock indexes rose 2.2 percent in both Italy and Spain, and 1.5 percent in France.
Italy's government, which is trying to reduce debt, has made spending cuts and tax increases that are hurting businesses and households. Investors hope that the European Central Bank will help support Italy buying its government bonds, which will hold down the interest rates the country must pay to borrow money.
(Copyright 2012 by The Associated Press. All Rights Reserved.)