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Stocks Rise; Energy Gains; Verizon, AT&T Fall

Stocks advanced amid several positive earnings reports and as debt concerns among peripheral euro zone countries faded for the moment.

The Dow Jones Industrial Average rose more than 45 points at the open after falling for a third straight session on Monday.

Hewlett-Packard, Bank of America , and American Express led blue-chips higher, whileVerizon and AT&T lagged.

The S&P 500 and the Nasdaq also advanced. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.

Most key S&P sectors gained, led by energy, financials and materials. Telecom fell.

The dollar traded flat against a basket of currenciesas the euro slipped. Worries about euro zone debt still lingered among some investors who turned to gold, pushing the price of the precious metal up for a second day to more than $1,377 an ounce.

Verizon announced a long-awaited partnership with Apple to sell the iPhone on Monday. Verizon said the iPhone will be available in February. Shares of the wireless carrier remained down about 2 percent, as the addition of the iPhone to Verizon's offerings could dilute earnings as it will have to subsidize the cost of the smartphone.

AT&T shares also remained lower as the arrangement was expected to pull customers from the wireless rival to Verizon, according to analysts.

Energy stocks rose as the price of oil rose above $90 a barrel, and officials said there was no word yet on when the Trans-Alaska would be restarted. A leak was discovered in the major pipeline last weekend.

Alcoa beat analysts' profit expectations in results posted after the market closed Monday, though the stock dropped as it has risen considerably in recent months.

In other earnings news, Sears soared after reporting a fourth quarter outlook that exceeded Wall Street's expectations as sales rose in several categories, including toys and sporting goods.

But Talbots plummeted after cutting its fourth quarter outlookand a reporting a sharp decline in same store sales so far this fiscal quarter, which ends Jan. 29.

Luxury retailer Tiffany reported a huge jump in holiday sales, and used the 11 percent year-over-year gain as reason to boost its full-year outlook for 2011. Shares gained in pre-market trading.

Also in retail, Macy's rose only slightly after Credit Suisse upgraded the department store retailer to "outperform" from "neutral," citing the likelihood that Macy's will continue to pay down debt, which will benefit stock holders.

Supervalu posted an unexpected loss for the quarter, causing the supermarket chain to lower its outlook, sinking its shares.

Also in earnings news, Lennar beat its profit target even though sales were lower than expected. Shares jumped 4.8 percent premarket.

Advanced Micro Devices slumped after news Monday that the semiconductor company's chief executive, Dirk Meyer, resigned in a "mutual agreement" with the board of directors. Thomas Seifert, chief financial officer, will become interim CEO as the company conducts a search for a new CEO.

Wells Fargo and Raymond James cut their ratings on AMD to "underperform," while S&P Equity raised its price target to $9 a share from $8.

St. Joe sank after the real estate development company said the Securities and Exchange Commission was conducting an informal inquiry into its impairment of investments in real estate.

European shares were higher with banking stocks among the best gainers. Concerns over the euro zone debt crisis remained sharply in focus after Portuguese Prime Minister Jose Socrates said the country would not ask for a bailout despite market pressure. Meanwhile, Japan pledged to buy euro zone bondsthis month to support the euro debt crisis.

Asian indexes ended mixed with Japanese stocks lower after Japan announced it planned to buy euro zone bonds to support the region's financial system.

On the economic front, wholesale inventories unexpectedly fell for the first time in 11 months by 0.2 percent in November, according to the Commerce Department. The drop reflected a surprising rise in wholesale sales. Economists surveyed by Reuters expected wholesale inventories to rise 1.0 percent from a downwardly revised 1.7 percent gain in October.

Also, National Federal of Independent Business index of small-business optimism slipped in December to 92.6 from 93.2 a month earlier.

Minnesota Fed President Narayana Kocherlakota will be speaking at 2 p.m. in Madison Wisconsin.

On Tap This Week:

TUESDAY: Minneapolis Fed President Narayana Kocherlakota speaks; 3-year Treasury note auction.
WEDNESDAY: Weekly mortgage applications, imports-exports price indexes, oil inventories, 10-year Treasury note auction, Federal Reserve’s Beige Book, Federal Reserve Chairman Timothy Geithner speaks; Dallas Fed President speaks.
THURSDAY: Bank of England and European Central Bank announcements, international trade, PPI, jobless claims, 30-year Treasury bond auction; after-the-bell earnings from Intel.
FRIDAY: CPI, retail sales, industrial production, consumer sentiment, business inventories, Richmond Fed president speaks; before-the-bell earnings from JPMorgan.

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