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.