Stocks Climb Before Close, Led by Industrials

Stocks rallied to new multi-year highs Tuesday after several robust earnings reports and a surprisingly strong report on consumer confidence added to increasing optimism about economy.

The Dow Jones Industrial Average gained more than 100 points, approaching its June 5, 2008 high of 12,604.45. The surge comes a day after a lackluster sessionas investors awaited earnings reports this week and news from the Federal Reserve's policy setting meeting on Wednesday.

Among Dow components, Microsoft and Caterpillar advanced, while Coca-Cola fell.

The S&P 500 rallied to hit its highest level since June 2008, while the tech-heavy Nasdaq hit its highest level since October 2007. The CBOE Volatility Index, widely considered the best gauge of fear in the market,fell below 16.

All key S&P 500 sectors rose, led by industrials, telecom and energy.

Solid earnings reports fueled a broad-based rally on Tuesday, as Ford, 3M and UPS, among others, all posted better-than-expected results, although earnings from some companies, including Coca-Cola and Under Armour, disappointed. So far, 75 percent of earnings from the 151 companies reporting beat earnings estimates, while 70 percent beat revenue estimates, according to Thomson Reuters.

The results of several companies were powered by international sales, often from emerging economies including Brazil and China, which isn't necessarily a good sign for the U.S. economy, said Doreen Mogavero of Mogavero Lee, a brokerage firm.

"It’s a little unsettling to me in terms of our economy," Mogavero said.

The stock market, however, should continue to rally for the short-to-intermediate term, David Loesser, president and founder of The Estate Planners Group said on CNBC.

“This is a wonderful market—from a technical point of view, we see the 20-day, 50-day and 100-day moving averages being exceeded by their price pretty significantly,” Loesser said.

Ford gained after the automaker beat expectations with its best quarterly profit in 13 years,driven by strong sales in its home market and demand for more fuel-efficient vehicles.

3M also climbed after the diversified manufacturer delivering better-than-expected results, thanks to emerging market sales. The industrial conglomerate also raised its profit forecast for the year.

Cummins skyrocketed as the engine manufacturer also benefited from rising overseas sales and a recovering truck market in North America. The company's first quarter profits more than doubled, and Cummins raised its 2011 sales forecast by $1 billion.

UPS rose after the package delivery company beat expectations and raised its forecast. The shipping company also got a boost from overseas sales, which for UPS, helped to offset higher fuel costs.

But not all the news was good. Coca-Cola slumped after the beverage maker's earnings fell short of estimates amid rising costs.Coke also blamed the disasters in Japan for reducing revenue.

And Coach slipped even after the retailer reported a stronger than expected profit thanks to rising sales in North America. But the upscale retailer said the disasters in Japan would hurt results going forward.

US Steel sank after reporting a bigger loss per share than expected, while AK Steel soared after reporting first quarter earnings that more than quadrupled.

Under Armour tumbled despite a 36 percent jump in revenue and an increase in net income, as investors focused on a 68 percent increase in inventory.


And Netflix fell sharply lower after the online video rental service delivered a disappointing outlook. Janney Capital Markets cut its rating for the online movie rental company to "sell," but at least six brokerages raised their price targets for the stock. and Broadcom are among the biggest firms that are expected to report earnings after-the-bell tonight.

On Wednesday, Boeing, BP, ConoccoPhillips and Credit Suisse will release results.

IBM rose to a 52-week high after its board approved a 15 percent boost in its quarterly cash dividend, and authorized an $8 billion stock buyback.

In other tech news, Oracle's CFO Jeff Epstein resignedafter more than two years on the job. Epstein will be replaced by his boss, Oracle President Safra Catz.

Sony said it plans to introduce two tabletslater this year running Google's Android operating system, which will compete with the popular Apple iPad. However, Sony shares were trading lower after Sony's PlayStation Network ran into its seventh consecutive day of outage. The company said it has no timeframe for restoring the system.

Among HMOs, Humana shares jumped after the health insurer said its earnings would be better than expected and announced a dividend of 25 cents a share payable July 28. The company will also increase its share repurchase program to $1 billion by 2013.

And Unitedhealth advanced after Raymond James raised its price target to $55 from $50.

Gold prices fell to close at $1,503 an ouncewhile silver fell more than 4 percent to close at $45.06, after hitting a 31-year high in the previous session.

The pullback is merely a “little hiccup,” said Phillip Streible, senior market strategist at Lind-Waldock.

“[The silver rally’s] got fundamentals behind it—this is not an inflation play by any means,” he said on CNBC. And despite the day’s pullback, Streible expects silver to climb to “at least $60” an ounce.

Oil prices gained slightly. London Brent crude rose to close at $124.14 a barrel, while U.S. light crude rose slightly to close at $112.21.

Shares of Chevron , ExxonMobil, ConocoPhillips and OccidentalPetroleum rose after Citigroup raised its price target on the oil giants.

Food Economics - A CNBC Special Report
Food Economics - A CNBC Special Report

Treasury prices gainedafter the government auctioned $35 billion of 2-year notes, which had a high yield of 0.673 percent and bid-to-cover of 3.06.

In the day's economic news, the Conference Board reported that an index of consumer confidence rose more than expected to 65.4 in April from a revised 63.8 in March. The report also showed more consumers see the labor market improving, and fewer expect to see rising inflation.

"There were concerns consumers would wilt under rising energy costs in particular," said Bruce McCain, chief investment strategist at Key Private Bank.

Instead, consumers have a more positive outlook on inflation, and "expect their incomes would rise and would overcome the spending detriment caused by rising commodity costs," he said, adding, that "gives a more optimistic outlook for consumer spending."

Also, single-family home prices fellfor the eighth month in a row, according the S&P/Case Shiller composite index. A composite index of 20 metropolitan areas fell 0.2 percent in February on a seasonally adjusted basis from January; the index fell 3.3 percent year-over-year.

Investors are also focused on the Federal Reserve's policy making committee meeting this week. Fed Chairman Ben Bernanke will hold an unprecedented press conferenceafter the meeting.

While these meetings haven't told the markets much in recent months, there's "greater intensity in looking at the Fed and where they might go after the end of June than there has until this point, when the primary focus was getting the economy going again," McCain said. The Fed's $600 billion bond program — its second round of so-called quantitative easing — ends in June.

While the press conference may not reveal much beyond the Fed's statement, there "may be some market moving interpretations of whatever is said," he added.

In Europe, shares rose for the fourth consecutive sessionand hit a two-week closing high, boosted by robust earnings reports.

On Tap This Week:

TUESDAY: Earnings after-the-bell from and Broadcom
WEDNESDAY: Durable goods, oil inventories, 5-year Treasury note auction; earnings before-the-bell from Boeing, BP, ConocoPhillips, Barrick Gold, Corning, Credit Suisse, General Dynamics, Northrop Grumman, and after-the-bell from eBay, Starbucks, Allstate, Baidu, Citrix, Flowserve, and Norfolk Southern.
THURSDAY: GDP, jobless claims, pending home sales, 7-year Treasury note auction; earning before-the-bell from AstraZeneca, Deutsche Bank, Exxon Mobil, PepsiCo, P&G, Royal Dutch Shell, Sanofi-Aventis, Bristol Myers, Discovery Communications, Dow Chemical, Medco Health, Motorola Solutions, Occidental Petroleum, Pulte Group, Raytheon, Sprint Nextel, Starwood, Thomson Reuters, Time Warner Cable, and Viacom, and after-the-bell from Microsoft, Cliffs Natural Resources, and Motorola Mobility.
FRIDAY: Personal income, personal spending, Chicago PMI, Thomson Reuters/University of Michigan consumer sentiment; earnings before-the-bell from Caterpillar, Chevron, Merck, DR Horton, Pitney Bowes, and Weyerhaeuser.

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