Stocks received a little extra jolt Tuesday after a housing report came in slightly better than expected.
The Dow Jones Industrial Average had been maintaining gains throughout the session, after Wal-Mart beat earnings expectations and an resurgence in oil prices pushed oil stocks higher. Gains had begun to dwindle until the housing report at 1 p.m., when stocks moved decidedly higher and the Dow moved back into triple-digit-gain territory.
Home-builder sentiment rose unexpectedly in February, with the NAHB/Wells Fargo Housing Market index climbing to 20 from 19 in January. In December, that gauge had fallen to 18, its lowest level since the survey began in 1985. Economists had expected a flat reading. Still, the index has a long way to go to get back to its peak of 72, set in 2005. A gauge of building activity in the next six months slipped.
Also offering the market some incentive was Minneapolis Federal Reserve President Gary Stern, who said the central bank's interest-rate cuts are appropriate to restore stability to the financial markets and prevent further damage to the economy.
AIG was the top gainer on the Dow after an article in Barron'scalled the insurance giant's stock a "screaming buy."
Blue-chip oil stocks Exxon Mobil and Chevron were also among the Dow's top performers. Oil prices jumped nearly three dollars to $98.35 a barrel amid supply concerns following a Texas refinery fire on Monday and concerns about supply disruptions from Venezuela, Nigeria and Russia.
The recently announced Dow changes take effect today. Chevron and with Bank of America were officially added to the blue-chip average today, while Altria and Honeywell were dropped.
Shares of Hewlett-Packard advanced ahead of the computer and printer maker's earnings, due out after the closing bell. Analysts expect earnings of 81 cents a share.
Wal-Mart gave the market an early boost with better-than-expected earnings. The world's largest retailer reported its net income rose 4 percent to $4.1 billion, or $1.02 a share, in the fiscal fourth quarter ended Jan. 31. Excluding charges for dropped real-estate projects and restructuring, the world's largest retailer earned $1.04 a share, beating analysts' expectations by two cents a share. Revenue increased 8.3 percent to $106.27 billion.
"The death of the consumer has been greatly exaggerated," Jack Bouroudjian, a principal at Brewer Investment Group, told "Squawk Box" after Wal-Mart's report. Still, Wal-Mart warned that consumers are becoming more cautious and said its earnings in the current quarter would fall short of estimates.
Elsewhere in retail, Best Buy slipped after Jefferies, which has a "hold" rating on the electronics retailer's stock, cut its price target to $42 from $46.
Bed, Bath & Beyond fell after Morgan Keegan cut its rating on the home-furnishings retailer's stock to "underperform" from "market perform."
U.S. Steel rose after UBS upgraded its rating on the steelmaker's stock to "buy" from "neutral," citing soaring iron-ore prices, which are up about 65 percent from a year earlier.
Martha Stewart Living Omnimedia shares shot up about 10 percent following news that the domestic empire is buying the Emeril Lagasse franchise -- TV shows, cookbooks, everything -- for $45 million in cash and $5 million in stock. Separately, MSO also bought a 40 percent stake in WeddingWire.com for an undisclosed sum. Earlier, MSO reported its profit doubled but missed Wall Street estimates by two cents a share.
Investors continue to look skyward for a merger. Delta Air Lines purchase of Northwest Airlines was moving closer to completion, the New York Times reported Tuesday. The boards of both companies have emergency meetings scheduled for today. A deal is expected to be announced on Thursday.
In other deal news, Microsoft is prepared to authorize a proxy fight for Yahoo, people familiar with the situation told DealBook. In an interview Monday with Reuters, Bill Gates said that Microsoft won't raise its $31-a-share bid for Yahoo.
MBIA announced that former CEO Joseph "Jay" Brown is returning to the company's helm. Brown said he is optimistic that a deal involving New York state insurance regulators aimed at resolving the bond insurer's financial woes could be reached within the next two weeks.
In Europe Tuesday, banks rattled markets with news of more write-downs. Credit Suisse announced an unexpected $2.85 billion write-down and said it found pricing errors on its books. British bank Barclays raised the value of its 2007 write-downs to 1.6 billion pounds ($3.1 billion), but Barclays President Bob Diamond told CNBC Europe that the bank's profit was in line with expectations and that risks are under control.
Shares of Lehman Brothers skidded following a Wall Street Journal report that suggested the bank could face a write-down of about $1.3 billion in its rockiest quarter yet.
Medical device maker Medtronic met analyst estimates even though it said quarterly profit fell to 7 cents a share because of its acquisition of Kyphon.
Office Max, meanwhile, soared past analysts' expectations, posting a quarterly profit excluding items of 65 cents a share, compared to analyst expectations of 52 cents.
|Tue: H-P earnings after the bell|
|Wed: CPI, Housing starts, Fed minutes|
|Thu: Jobless claims, Philly Fed report, J.C. Penney earnings|
|Wild Card: Delta-Northwest merger may be announced|
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