Stocks up on earnings; Dow rebounds after worst five-day drop since 2012
U.S. stocks surged on Tuesday, with the Dow Jones Industrial Average rebounding after a five-session rout, as investors embraced better-than-expected quarterly earnings from companies including D.R. Horton and Pfizer.
Ford Motor climbed after the automaker posted a higher-than-expected quarterly profit; Apple fell after reporting iPhone sales missed Wall Street estimates. In a tweet Tuesday, Carl Icahn said he had just purchased another $500 million more Apple shares. D.R. Horton rallied after the homebuilder's sales picked up in January, with the company reporting its most profitable first quarter since 2006.
Of the 153 companies in the S&P 500 that have reported fourth-quarter results, 69.3 percent have reported earnings above Wall Street's estimates, while 68.6 percent have posted revenue that topped expectations, according to Greg Harrison, senior research analyst at Thomson Reuters.
"Earnings growth is not overwhelming, but enough to propel us forward," said Chip Cobb, portfolio manager at BMT Asset Management.
After losing 3.77 percent over the last five sessions, its worst five-day percentage decline since April 2012, the Dow Jones Industrial Average ended at 15,928.56, up 90.68 points, or 0.6 percent, with Pfizer leading blue-chip gains after the largest U.S. drugmaker reported better-than-expected fourth-quarter results.
The S&P 500 added 10.94 points, or 0.6 percent, to 1,792.50, with health care and financials leading and technology the sole laggard of its 10 major sectors.
After initial wavering, the Nasdaq climbed 14.35 points, or 0.4 percent, to 4,097.96. Beyond Apple's slide, shares of Rent-A-Center also hit the index after the company, which leases furniture and appliances, reported disappointing fourth-quarter results.
For every share falling, roughly three gained on the New York Stock Exchange, where 622 million shares traded. Composite volume topped 3.4 billion.
The Federal Open Market Committee began its last meeting under Chairman Ben Bernanke on Tuesday, with a policy announcement due Wednesday afternoon. The Fed last month said it would start to trim its monthly bond buying by $10 billion to $75 billion this month.
Consumer confidence rose to 80.7 in January, versus expectations the index would come in at 78.1, unchanged from the prior month.
Ahead of Tuesday's opening bell, stock-index futures scaled back their limited gains after the government reported durable goods fell 4.3 percent in December. In addition, the Case-Shiller home price index rose 13.7 percent in November.
"Consumption is mild at best. Businesses are spending to a very minor degree, and much of that is on IT and some equipment. That bodes back to companies trying to keep productivity at peak levels with a minimum number of people," said Cobb of the durable-goods data.
On Monday, U.S. stocks fell as investors worried about China's economy and considered the Fed's monetary policy.
"I don't think it's all that disheartening; we were probably ahead of ourselves at the end of the year, and there's probably more to come," said Cobb of Wall Street's recent retreat, with has the S&P 500 down more than 3 percent in January. "I anticipate we're going to be higher at the end of the year then we are now," he said.
—By CNBC's Kate Gibson
Coming Up This Week:
Tuesday: Federal Open Market Committee starts two-day meeting. Earnings expected from Comcast, DuPont, Ford, Pfizer, Yahoo, American Airlines, AT&T, Amgen, Ace, Owens-Illinois, CIT group, Corning, Nucor, DR Horton, Illinois Tool Works, WMWare, Siemens, NextEra Energy.
Wednesday: FOMC statement to be released at 2 p.m. Eastern. Earnings from Boeing, Facebook, Chrysler/Fiat, Novartis, Biogen Idec, EMC, JetBlue, Dow Chemical, Wellpoint, Qualcomm, Citirix, Las Vegas Sands, Novartis, Marathon Petroleum, Southern Co, Valero and Symantec.
Thursday: Initial jobless claims at 8:30 a.m. Eastern, Real fourth-quarter GDP at 8:30 a.m. Eastern. Pending home sales at 10 a.m. Eastern. Earnings from Google, Exxon Mobil, Amazon.com, Chipotle, ConocoPhillips, Celgene, Eli Lilly, 3M, UPS, Royal Dutch Shell, Diageo, Occidental Petroleum, Colgate-Palmolive, Harley-Davidson, Northrop Grumman, LVMH, Time Warner Cable, Altria, PulteGroup, Raytheon, Ericsson, Blackstone, Viacom, Whirlpool, Under Armour, Cardinal Health, Visa, Potash, Tenneco, Sherwin-Williams, Autonation and Beazer Homes.
Friday: Personal income at 8:30 a.m. Eastern. Consumer sentiment at 9:55 a.m. Eastern. Housing vacancies at at 10 a.m. Eastern. Earnings from Chevron, Honda, MasterCard, Autoliv, Brookfield Office Properties, Dominion, Mattel, National Oilwell, Tyson Foods, Weyerhaeuser, Booz Allen Hamilton, Lear Legg Mason, Tyco, Mead Johnson, Aon and Paccar.
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