Stocks ended higher Tuesday as investors were encouraged by comments from Treasury Secretary Tim Geithner that most banks are well capitalized.
Stocks had started out the day on wobbly footing as another wave of disappointing earnings news weighed on the market. Techs jumped out in front of the pack ahead of Yahoo earnings, due out after the bell.
The Dow Jones Industrial Average wavered in early trading but then made a break into positive territory, ending up 127.83, or 1.6 percent, at 7,969.56. The tech-heavy Nasdaq gained 2.2 percent, while the S&P 500 gained 2.1 percent.
“Nervousness has returned to the market again and that’s a troubling fact,” Art Cashin, director of floor operations at UBS, told CNBC this morning.
The CBOE volatility index, widely considered the best gauge of fear in the market, dropped more than 5 percent to finish at 37.14.
Today's wobbly session came after Monday's selloff that shaved nearly 300 points, or more than 3 percent, off the Dow as worries about a huge jump in troubled loans at Bank of America stirred worries about the banks.
Bank stocks rebounded, and helped buoy the Dow, after Geithner said most banks have enough capital to keep lendingbut a pile of bad loans is raising doubts about some banks' health.
Citigroup jumped 10 percent after CEO Vikram Pandit said the bank will pay back every penny of TARP moneyit's received.
But Bank of New York Mellon slipped after the bank reported its first-quarter profit fell by more than half as fees tumbled. The bank also slashed its dividend 63 percent in an effort to build capital.
United Technologies rose 4.8 percent after the industrial giant projected it will return to growth next year.
But, like most up days in the market recently, the session was also peppered with some disappointing news.
Caterpillar managed to finish higher after the construction bellwether widely beat analyst expectations excluding items but said 2009 would be more difficultthan this year.
Coca-Cola shares dropped 2.8 percent after the soft-drink maker posted earnings that met expectations but revenue disappointed.
DuPont jumped nearly 5 percent after the chemical maker posted a sharp drop in earnings and missed revenue expectations but said it's taking steps to cut costs and restructure.
Tech stocks advanced, with Yahoo up more than 5 percent ahead of its earnings and Intel up 2.4 percent.
IBM rose 1.9 percent after one portfolio manager slapped the stock with a "buy" rating.
But Broadcom declined 5.8 percent as the chip maker, which made an unsolicited bid for networking-equipment maker Emulex , reported a loss of 19 cents a share, missing expectations — analysts had expected a 3-cent profit.
The Emulex deal is the second deal in the sector in the past week, following news that Oracle would buy Sun .
"A lot of the technology companies have pristine balance sheets and lots of cash, so it makes sense to make strategic acquisitions at this point in time, so when the cycle does turn they'll have a competitive advantage that has been enhanced," Bucky Hellwig, senior vice president at Morgan Asset Management, told Reuters.
In the health-care sector, Schering-Ploughsaid quarterly revenue fell 6 percent to $4.39 billion but reported higher-than expected first-quarter earnings. Its shares fell 4.1 percent.
UnitedHealth Group shed 5.8 percent after the health-insurance providerreported itsfirst-quarter profit came in slightly lower as membership in commercial plans for employers fell but beat expectations.
Merck shares tumbled 6.7 percent after the drug maker reported earnings of 74 cents a share, which missed estimates by 3 cents. The company said it was hurt by global sales weakness and costs relating to its acquisition of Schering-Plough.
General Motors shares gained 2.4 percent following news that troubled US automakers will have access to a new credit line from the government.
Chrysler will be able to tap about $500 million from the Obama administration, while General Motors will be able to access up to $5 billion, the rescue fund said.
TUESDAY: Citigroup shareholders meeting; Earnings from Yahoo and Capital One after the bell
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Earnings from AT&T, Boeing, McDonald's, Morgan Stanley, Wells Fargo, Altria, Ingersoll-Rand, Kimberly-Clark, Apple, eBay, Qualcomm and Yum! Brands
THURSDAY: Weekly jobless claims; existing-home sales; Earnings from Conoco-Phillips, GlaxoSmithKline, Pepsi, UPS, Fifth Third, Marriott, PNC Financial, SunTrust, Union Pacific, US Air, Microsoft, Amazon, AmEx and Burlington Northern
FRIDAY: G-7 meeting in Washington; durable-goods orders; new-home sales; Earnings from 3M,Honeywell, Schlumberger and Xerox
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