Stocks ended sharply higher Tuesday after a late rally as investors cheered a better-than-expected existing-home sales report.
The Dow gained 102.94, or 1 percent, to close at 10,888.83, another 1 1/2-year closing high. Kraft and Pfizer were the biggest gainers.
The S&P 500gained 0.7 percent, with industrial and technology the best-performing sectors. The tech-heavyNasdaq climbed 0.8 percent.
Several large caps hit new 52-week highs, including Kraft, Apple and Cisco.
This came after stocks rose Monday, with the Dow closing at a 1 1/2-year highas investors were relieved that uncertainty surrounding health-care reform was lifted with the weekend passage of the bill. The President signed the legislation into law earlier today. The Senate this week will take up a package of changes suggested by the House.
This "afternoon effect"has been present in the past week or so: Stocks are weak in the morning as investors worry about Greece's debt problems and China tightening, then pick up steam in the afternoon as traders start to work up their appetite for risk and trading the trends.
Existing-home salesfell 0.6 percent in February, smaller than the 2 percent expected and the 7.2-percent drop in January.
In the morning's earnings news, homebuilder KB Homereported a large-than-expected loss for its latest quarter.
Drugstore chain Walgreenalso missed its target but investors cheered theimprovement in its margins.
Caterpillar gained more than 3 percent after Wells Fargo raised its price target on the stock to $73-$75 from $63-$65, citing the company's long-term growth potential.
Techs turned in a solid showing, with strong gains in chips after two chip makers — Integrated Silicon Solution and Taiwan Semiconductor — raised their outlooks.
Intel and Research In Motion were among the biggest gainers on the Nasdaq 100.
But Google lost another 1.5 percent as the stock continued its slide following a decision to redirect traffic from its Chinese search engine to its Hong Kong site amid a censorship dispute with China.
There was some profit-taking in health care, after the sector led Monday's advance on the prospect of 32 million more patients being added to the health-care system with the passage of the health bill.
Humana , WellPoint and Aetna were all lower.
Bank stocks finished mostly higher as a draft of financial reform legislation was approved by a Senate panel last night and now moves to the full Senate for a vote. The legislation apparently leaves out two key issues — the creation of a single fiduciary standard for financial advisers and mandatory arbitration for customer disputes.
Citigroup was still on a tear — up another 2.2 percent today, after a 4-percent gain Monday following an upgrade to "buy" from Rochdale analyst Dick Bove.
Citigroup "will be a money-making machine again and the stock is long-term cheap," Bove said.
Toyota shares gained more than 2 percent as the automaker raised its global production plans for this year by one percent to 7.57 million vehicles. Its well-publicized troubles aside, Toyota has been helped by subsidy-led demand for fuel efficient cars in Japan.
Some deal news to note today: Aircraft-components maker Triumph Group has agreed to acquire Vought Aircraft Industries from Carlyle Group in a deal worth $1.44 billion that includes 7.5 million shares and $525 million in cash.
The Treasury kicked off a week of auctions with $44 billion in two-year notes today, which had a high yield of 1.000 percent and a bid-to-cover ratio of 3.00.
That will be followed by a sale of $42 billion in 5-year notes Wednesday and $32 billion in 7-year notes on Thursday.
A trio of Fed speakers today: In separate speeches, Chicago Fed President Charles Evans and San Francisco Fed President Janet Yellen said the Fed must keep rates low for now to help energize growth. And Philadelphia Fed President Charles Plosser said better regulation is needed to keep risk-taking at financial institutions in check.
This comes ahead of a speech by Kansas City Fed President Thomas Hoeing, the lone dissenter in the Fed's latest statement, on Wednesday at 10:45am EDT.
Volume was light once again, with about 8 billion shares changing hands on the three major exchanges, more than 1.5 billion less than last year's daily average. Advancers outpaced decliners, more than 2 to 1.
This Week:
TUESDAY: Earnings from Adobe after the bell
WEDNESDAY: Weekly mortgage apps; durable-goods orders; new-home sales; weekly crude inventories; Fed's Hoenig speaks; five-year auction
THURSDAY: Toyota class-action hearing; weekly jobless claims; Fed's Pianalto speaks; seven-year auction; Earnings from Best Buy and Oracle
FRIDAY: Final read on Q4 GDP; consumer sentiment; Fed's Warsh, Bullard speak
Send comments to cindy.perman@nbcuni.com.
