Stocks Rally; Goldman, Apple Advance

Stocks rose for a second straight day Tuesday as cyclicals like energy and materials advanced. Retail stocks gained after the Senate cleared a hurdle toward extending unemployment benefits.

Stocks had been lower for much of the day amid revenue weakness in the latest round of earnings reports and another disappointing housing report.

Materials, energy and industrials were among the day's best performers; health-care stocks were among the weakest.

The Dow Jones Industrial Average gained 75.53, or 0.7 percent, to close at 10,229.96, after being down double that earlier.

Home Depot , Walmart and Alcoa led the rally, all up more than 2 percent.

The S&P 500 and Nasdaqalso finished higher — both up more than 1 percent. The CBOE volatility index, widely considered the best gauge of fear in the market, dropped to around 24.

Some speculated that the afternoon rally may have been in anticipation of some action by the Fed to help loosen up lending — perhaps that it might eliminate interest paid on excess bank reserves held at the Fed. Fed Chairman Ben Bernanke testifies before Congress on Wednesday.

The Senate voted 60 to 40 to end the filibuster and move toward a final voteon extending jobless benefits, which is expected later today. The House is expected to approve the measure on Wednesday and send it to President Obama to sign into law.

Goldman Sachs shares rose 2.2 percent as the banking giant beat earnings expectations but, true to this season, revenue missed.

Johnson & Johnson shares fell after the health-care giant reported a increase in earnings but flat revenueamid ongoing recalls of popular nonprescription medicines. The company also reduced its profit forecast for the year by 15 cents a share.

Techs, some of the best performers on Monday, ended mixed after disappointing earnings late Monday from IBM and .

Analyst reactions to the tech firms have been mixed: JPMorgan raised its price target on IBM to $144.50 from $142.50, while at least two brokerages cut their price targets.

And, Macquarie raised its price target on Texas Instruments to $25 from $24.90, but at least two brokerages cut their ratings and price targets.

“Every quarter, the hurdle gets higher—more has to come from revenue growth,” Mark Eibel, director of client investment strategies at Russell Investments told CNBC.

“The reason why revenue is the focus is that investors are looking for a reason to believe that things are getting better," Eibel explained. "They’re not getting it from the macro as much, so they’re looking for any indication. So that’s why the bar is higher.”

Intel , which delivered an encouraging earnings report last week, eked out a gain as the chip giant is nearing a settlement with the FTC over antitrust allegations, a case that has dogged the company for more than 10 years.

Apple and Yahoo are scheduled to report after the closing bell today.

Apple shares rose following a three-day losing streak. Analysts who follow the iPhone maker are expecting the firm to earn $3.11 a share on revenue of $14.75 billion, according to a consensus from Thomson Reuters.

And some strategists appeared to be bullish on the stock.

“The opportunity to invest in this leading company (with a better financial profile than market participants seem to acknowledge) appears 'iTtractive' at its current multiple,” wrote David Einhorn, president of Greenlight Capital in his quarterly letter to investors. “While growth over the next few years will certainly be slower than it has been over the last few years, Apple does not appear to have fully penetrated its market opportunities.”

Among the notable companies reporting earnings tomorrow are: Morgan Stanley, Coca-Cola, United Technologies, Wells Fargo, USBancorp, Qualcomm and Starbucks.

Consumer staples were some of the day's best performers after Pepsibeat analysts' expectations with its latest earnings report, helped by strength in international snack and beverage markets and the recent acquisition of its North American bottlers.

Homebuilder stocks rose despite two disappointing housing reports in as many days: Housing starts hit their lowest level in eight months in June, according to a report out today, but a rise in permits offered hope that homebuilding was poised to pick up.

This followed a report yesterday that homebuilder sentiment is at its lowest level in more than a year.

Toyota shares fell following news that the auto maker was subpoenaed by a federal grand jury for documents related to a problem with a steering mechanism in some of its vehicles.

Meanwhile, a day after Amazon announced that it's now selling more Kindle books than hardcover books, Japan's Sharp has announced that it will be the latest company to enter the e-reader and e-book market.

BP shares slipped amid worries about whether or not the cap on the damaged Gulf well will hold. Tests determined that nearby seepage was not related to the leak. BP also announced today that it will sell some of its assets in North America and Egypt to Apache for $7 billion.

Oil prices rose to $77.44 a barrel, while gold jumped to $1,191.50 an ouncewhile the euro fell against the dollarfrom a more than two-month high.

Volume was average, with about 1.1 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, nearly 4 to 1.

This Week:
TUESDAY: Earnings from Apple and Yahoo after the bell
WEDNESDAY: Weekly mortgage applications; Bernanke testifies before Congress; weekly crude inventories; earnings from Coca-Cola, Morgan Stanley, UTX, Wells Fargo, USBancorp, eBay and Qualcomm
THURSDAY: ECB meeting; weekly jobless claims; Fed's Dudley speaks; existing-home sales; leading indicators; earnings from AT&T, Caterpillar, 3M, Travelers, UPS, BB&T, Fifth Third, KeyCorp, Nokia, PNC Bank, SunTrust, Amazon, American Express, Microsoft and Capital One
FRIDAY: EU bank stress-test results; earnings from Ford, McDonald's

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