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Dow Logs Another 1% Gain; Ford Advances

Tuesday, 2 Feb 2010 | 5:24 PM ET

Stocks turned a shaky start into a full-throttle rally Tuesday as UPS delivered an encouraging earnings report, pending home sales rose and Ford reported a double-digit increase in sales.

The Dow Jones Industrial Average logged its second straight triple-digit gain, rising over 111.32, or 1.1 percent, to close at 10,296.85, following a 1.2-percent gain on Monday. That leaves the blue-chip index down just 1.3 percent for the year.

The S&P 500 gained 2.7 percent in the past two days, its best two-day gain since October, following a three-week slide at the end of January.

“So far, I think it’s still an oversold reflex rally and it should be a multi-day event,” Art Cashin, director of floor operations for UBS, said on CNBC this morning. "You’ve got severely oversold in some of this and you’re entitled to a bounce.”

Among 10 key S&P sectors, health care was the biggest gainer, followed by industrials and consumer discretionary as traders placed some recovery bets and oil pushed above $77 a barrel.

General Electric led the Dow, followed by Merck and Pfizer , which reports earnings tomorrow.

Alcoa rose more than 2 percent after yesterday's better-than-expected ISM reporton manufacturing.

UPS posted a profit of 75 cents a sharethat narrowly beat market estimates. The company also projected a jump for 2010.

And Whirlpool gained more than 8 percent after the washing-machine maker said its earnings doubled in the fourth quarter and delivered a better-than-expected outlook.

Homebuilders also finished strong after a report showed pending-home sales rose 1 percent. and homebuilder D.R. Hortonposted a surprise profit.

Financials American Express , which has been hammered this year, and JPMorgan also finished near the front of the Dow pack.

On Monday, late buzz that Sen. Richard Shelby of Alabama came out against the Volcker rule, which threatened to derail bipartisan support for financial reform and triggered a late surge in stocks — notably, financials.

White House economic adviser Paul Volcker testified on Capitol Hill today, urging Congress to rein in risky bank business to prevent them from becoming "too big to fail."

Dow Chemicalbeat analyst estimateson both the top and bottom lines but the stock skidded.

And Ann Taylor shares shot up more than 16 percent after the women's clothing retailer said its fourth-quarter sales and gross margins were better than expected and will enable earnings to exceed expectations.

Ford shares jumped more than 2 percent after the auto maker reported its sales rose 35 percentin January, helping it gain about 2 percent more market share.

Toyota, however, reported a nearly 9-percent decline in sales as the auto maker grapples with a massive recallregarding a glitch with brakes in some models and its shares continued to slide.

Electric car maker Tesla is expected to price its IPO later this week, in what will be the auto industry's first IPO since Ford debuted in 1956.

Elsewhere, Goldman Sachs put Advanced Micro Devices on its "conviction sell list" on the belief the chipmaker will continue to lose money.

Overall, techs lagged the broader market but Palm jumped over 7 percent after another brokerage, Deutsche Bank, raised its price target on the stock. This came a day after Curhan started coverage of the stock at "neutral," saying the latest versions of the Pre and Pixi have revitalized the company.

And Research In Motion which received an upgrade to "buy" from Standpoint Research on Monday, rose more than 2 percent.

Google shares were slightly lower after a Wall Street Journal report that the Internet titan is preparing to launch an online business software store.

After being all but left for dead by investors last year, Eastman Kodak has proven to be the little stock that could: Shares gained another 12 percent today after the company last week reported better than expected earnings. The stock has gained about 40 percent since that report.

Volume was light, with just 1.18 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 4 to 1.

Still to Come:

WEDNESDAY: Weekly mortgage apps; Challenger and ADP job-cuts reports; ISM services index; weekly crude inventories; Fed's Warsh speaks; Earnings from Pfizer, International Paper, Time Warner, Cisco, Visa and Yum Brands
THURSDAY: Senate hearing on NBC-Comcast; Tea Party Convention; chain-store sales; ECB, BOE announcements; weekly jobless claims; factory orders; Earnings from GlaxoSmithKline, Vodafone, Kellogg, MasterCard, Northrop Grmman, Sony, Unilever and Burger King
FRIDAY: Earnings from Aetna and Tyson Foods

Send comments to cindy.perman@nbcuni.com.

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