Stocks bounced back Tuesday after a report showed consumer confidence rose for a third straight month.
Stocks had opened lower as China weighed on the market after tightening bank-lending requirements.
This came after stocks snapped a three-day losing streakon Monday as worries about Fed Chairman Ben Bernanke's confirmation subsided and investors scooped up bargains.
Consumer confidence hit its highest level since September 2008, the Conference Board reported. Its measure of confidence ticked up to 55.9 from an upwardly revised 53.6 in December; economists had expected the gauge to rise to just 54.
That, coupled with a report a day earlier that the worst may be over for retailers, helped energize the market. U.S. retail sales should rise 2.5 percent this year, after a 2.5-percent drop in 2009, the National Retail Federation reported.
Some good earnings news also helped buoy the market, but gains were limited.
"Some of the earnings improvement is already baked in the cake," Art Cashin, director of floor operations at UBS, said on CNBC this morning. "Plus, the market's still a little stunned and shakyafter the last three days of last week," when U.S. stocks had their worst week since March, he said.
Travelers was the biggest gainer on the Dow after the insurance giant surprised to the upside with a profit of $2.36 a share.
DuPont also beat estimates, reporting that its profit jumped 10 percent.
Apple was among the early leaders on the Nasdaq. The company dazzled the crowd on Monday, beating estimates with both earnings and revenue amid strong Mac sales.
Investors are also looking to Apple's announcement on Wednesday, which is expected to be about a new tablet computer that could give Amazon's Kindle a run for its money. (See a sneak peek of the tablet.)
Among other results from after the bell Monday: Texas Instruments topped forecasts, while biotech giant Amgenfell short.
Yahoo is the most prominent company on the schedule to release quarterly numbers after the closing bell.
Chips, one of Monday's biggest winners, largely shrugged off the IDC's projection that microprocessor sales will jump 15.1 percent this year. The Philadelphia Stock Exchange semiconductor index was up just 0.3 percent.
Ford was one of the top gainers in the Nasdaq 100 after the automaker formally announced plans to build the next version of its Explorer SUV at a Chicago plant, adding 1,200 jobs.
Toyota projected its sales will rise 6 percentthis year.
In the pharmaceutical sector, shares of Dynavax Technologies shot up after the company said an early-stage trial showed its experimental treatment for chronic hepatitis C was safe and induced antiviral activity.
Most homebuilder stocks were up more than 1 percent. The latest report out of the sector showed home prices in 20 major cities fell unexpectedly in November. On Monday, a report showed existing-home sales fell 16.7 percent in December. New home sales for the same month are due out on Wednesday; economists expect to see sales up slightly from November.
The Federal Reserve's policy-making Open Market Committee begins a two-day meeting today, with its statement coming tomorrow afternoon at approximately 2:15 pm New York time. Interest rates are unlikely to change, but investors are expecting to hear more details about removing the Fed's accommodative policies.
Plus, President Obama is expected to announce a three-year freeze on discretionary, "non-security" spending, which could happen during Wednesday's State of the Union speech. And the Treasury will auction $44 billion in 2-year notes today, with results available shortly after 1 pm New York time.
TUESDAY: Fed begins two-day meeting; Two-year note auction; Earnings from Yahoo after the bell
WEDNESDAY: Apple announcement; Geithner to testify; new-home sales; Five-year auction; Fed statement; Earnings from Boeing, Caterpillar, ConocoPhillips and United Technologies; Obama State of the Union
THURSDAY: Jim Chanos speaks on China bubble; durable-goods orders; seven-year auction; Earnings from 3M, AT&T, Eli Lilly, Ford, Nokia, P&G, Altria, Colgate-Palmolive, Lockheed Martin, Motorola, Microsoft and Amazon
FRIDAY: First look at Q4 GDP; Chicago PMI; consumer sentiment; Earnings from Chevron
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