IBM surged after the tech giant posted stronger-than-expected earningsafter-the-bell Monday and raised its full-year guidance, helped by strong sales of its computers and software. At least three brokerages raised their price targets on the firm.
Coca-Cola earnings topped estimates, helped by strong growth in markets outside the U.S. And Johnson & Johnson also said earnings beat estimates.
And Harley-Davidson soared almost 10 percent to lead the S&P 500 index after the motorcycle maker posted a higher-than-expected profit on strong sales and raised its forecast for shipments.
Investors will be focusing on Apple and Yahoo , which are due to report earnings after-the-bell.
Cisco gained after the tech bellwether said it plans to cut its workforce by 11,500 employees as part of its plan to cut annual expenses by $1 billion and revive its business.
News Corp's Rupert and James Murdoch spoke before UK members of parliamenton the ongoing phone hacking scandal. The S&P putting the company's debt on "ratings watch negative." However, shares were still trading higher.
Oil prices ralliedamidstrong economic data as U.S. light, sweet crude gained above $98 a barrel, while London Brent crude traded near $118. Meanwhile, gold eased off its record highs, trading near $1,600 an ounce.
On the economic front, housing starts rose more than expected in June to touch a six-month highand permits for future construction saw a surprise increase, according to the Commerce Department.
Lennar and D.R. Horton climbed more than 4 percent following the news.
Meanwhile, two weeks before their final deadline, President Obama and top lawmakers will face more pressure for a debt deal amid a growing sense that a last-ditch plan taking shape in Congress may be the only way to avoid a devastating U.S. default.
European shares pared some gainsafter German chancellor Angela Merkel said she did not expect one "spectacular result" at a meeting of euro zone leaders to discuss Greece's sovereign debt crisis.
Coming Up This Week:
TUESDAY: Fed's Hoenig speaks; Earnings from Apple and Yahoo
WEDNESDAY: Weekly mortgage apps, existing home sales, oil inventories; Earnings from Altria, United Tech, Abbott Labs, Blackrock, AmEx, Intel, Qualcomm and Ebay
THURSDAY: Weekly jobless claims, Philadelphia Fed survey, money supply; Earnings from AT&T, Morgan Stanley, Nokia, PepsiCo, Freeport McMoran, Travelers, Mircrosoft, AMD and SanDisk
FRIDAY: No major econ. news expected; Earnings from Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell
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