Stocks Gain More than 1%; Home Depot Rises

Stocks rose significantly Tuesday after days of losses, following a series of government data releases and earnings reports that showed hints of strength returning to the economy.

The Dow Jones Industrial Average was up more than 100 points, after a slight dip Mondayon very thin volume that nonetheless marked five straight days of losses for the blue-chip index.

Alcoa, Home Depot and DuPont led advancers. Kraft was the only Dow component to fall.

The S&P 500and Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 25.

The key S&P sectors were all higher Tuesday, led by materials, industrials and consumer discretionary.

Despite the strong positive moves, the market is still trading within a range that Brian Gendreau, market strategist at Financial Network, doesn't expect will be broken until after the mid-term elections and the uncertainty over the direction in Washington is resolved.

Once the mid-terms are over, Gendreau expects stocks will rise and will end the year higher. One reason: in the 17 mid-term elections held since 1942, the market has gone up decisively by 90 days after the election 16 times, Gendreau said.

The Federal Reserve reported Industrial Production rose 1.0 percentin July on strong factory output from auto manufacturing. The results were better than the 0.7 percent expected. June's results were revised to a loss of 0.1 percent. Factory output grew by 1.1 percent in July.

Capacity utilization was reported at 74.8, better than the expected increase of 74.6 percent.

The Commerce Department said housing starts rose 1.7 percentto a seasonally adjusted annual rate of 546,000 units in July, weaker than expected. Forecasts called for an annual rate of 550,000 units. June's housing starts were revised to show an 8.7 percent fall, which was previously reported as a 5 percent drop.

Also, the Labor Department reportedU.S. producer prices rose by 0.2 percentin July, the first rise in four months, pulled by higher prices for food and consumer goods. The figure was in line with expectations, and follows a dip of 0.5 percent in June.

Big retailers delivered earnings today, including Home Depot, which reported a slightly higher-than-forecast profit of 72 cents a share, better than the anticipated 71 cents a share. The retailer's second-quarter revenue was lower than expected, however.

Also Wal-Mart was slightly higher after it posted a higher-than-expected quarterly profitand raised its full-year forecast on Tuesday, thanks to cost cuts and international growth. The big-box retailer, however, said the slow economic recovery will continue to affect consumers.

As a sign of weaker buying interest, WalMart reported its fifth consecutive drop in same store sales, and the outlook isn't much better, Patrick McKeever, a senior equity analyst at MKM Partners, said on CNBC Tuesday.

"We could see another negative quarter," McKeever said.

Shares of TJX , were higher after the owner of deep-discount clothing and houseware chains T.J. Maxx, Marshalls and HomeGoods reported a jump in earnings of nearly 17 percent, as sales climbed. The retailer also raised its full-year outlook.

In merger news, the board of Potash of Saskatchewan, Canada, which focuses on fertilizer and industrial and feeds products, has rejected an unsolicited takeover bidfrom BHP Billiton , a diversified natural resources company, saying the deal undervalued the company. Potash's shares jumped more than 25 points, while BHP slipped.

General Motors is expected to file to go public Tuesday. The offering is expected to raise between $15 billion and $20 billion, making it one of the largest IPOs.

GM also announced Tuesday that it is recalling more than 243,000 model year 2009/2010 crossover sport utility vehicles to inspect safety belts for possible damage.

Tech stocks are largely higher Tuesday with the exception of Research in Motion . Wedbush downgraded the maker of the Blackberry to "outperform" from "neutral" and cut the stock's price target to $57 from $65.

Also, RIM reportedly has assured the Indian government it can have limited access to Blackberry Messenger email and instant messaging services by Sept. 1.

In other housing news, the Treasury Department is hosting a forum on what the government should do to reform Fannie Mae and Freddie Mac. Treasury Secretary Timothy Geithner made clear the government-sponsored enterprsies won't be able to return to business as usual. The housing finance companies have received nearly $150 billion in taxpayer bailout money since they were placed into conservatorship by the government in 2008.

Barclays Bank Plc

has agreed to pay nearly $300 million to settle criminal

charges that it violated U.S. sanctions in dealings with Cuba,

Iran, Libya, Sudan and Myanmar, according to U.S. court

documents filed Monday.

The London-based bank was charged with violating the

International Emergency Economic Powers Act and the Trading

with the Enemy Act in its dealings that involved $500 million

from 1995 until September 2006, according to the documents.

The Barclays case marked the latest in a series brought by

U.S. prosecutors in recent months against major banks. According to a quarterly filing with the U.S. Securities and Exchange Commission, George Soros trimmed his holdings in Pfizer, JPMorgan Chase, AT&T, and Wal-Mart, while Warren Buffett's Berkshire Hathaway cut stakes in ConocoPhillips (COP), Kraft Foods (KFT) and Procter & Gamble. Berkshire also bought shares of Fiserv and boost its stake in Johnson and Johnson.

In other news, Spain's Santander renewed talks to merge its U.S. operationswith those of M&T Bank, the Financial Times reported. And Hefty bag maker Pactiv is reportedly in talks to be acquiredby New Zealand's Rank Group.

Later This Week:

WEDNESDAY: MBA mortgage applications, weekly oil inventories; earnings before the bell from Deere and Target
THURSDAY: Jobless claims, leading indicators, Philadelphia Fed survey; earnings after the bell from HP, Dell, Gap and Intuit
FRIDAY: No major events scheduled

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