U.S. Stocks Climb, Driven by Strong Earnings Reports

By Riva Gold and Akane Otani Features Dow Jones Newswires

Caterpillar, McDonald's rise after earnings, supporting Dow industrials

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-- Bank stocks climb with bond yields; 10-year Treasury yield above 2.3%

-- Energy stocks follow oil prices higher; U.S. crude up 3.3%

U.S. stocks climbed Tuesday, bolstered by a flurry of upbeat earnings results.

Company earnings are expected to drive much of the trading action this week, analysts say, with roughly 40% of S&P 500 firms scheduled to post quarterly results through Friday.

Solid reports should help major indexes keep climbing, investors say, even as many have expressed concerns about stocks looking pricey relative to their historical valuations.

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"We're seeing other parts of the world experiencing growth for the first time in a number of years," said Ron Sanchez, chief investment officer at Fiduciary Trust. "The global backdrop is very positive for stocks."

The Dow Jones Industrial Average added 100 points, or 0.5%, to 21614, after three consecutive sessions of declines. The S&P 500 rose 0.3%, and the Nasdaq Composite added less than 0.1%.

A rally in Caterpillar, McDonald's and DuPont helped lift the Dow industrials. Shares of Caterpillar gained 5.9% after the equipment giant raised its revenue and profit outlook for the year, while McDonald's shares jumped 4.8% after the fast-food chain's earnings topped analysts' expectations. Shares of DuPont, whose earnings also surpassed expectations, added 1.4%.

Declines in the shares of 3M and United Technologies, both of which released quarterly results earlier Tuesday, weighed down the blue-chip index.

Stock indexes also received a boost from energy shares, which jumped 1.3% in the S&P 500, buoyed by a climb in oil prices. Energy stocks, the worst-performing sector in the S&P 500 this year, have come under pressure this year as oil prices have slid.

U.S. crude rose 3.3% to $47.89 a barrel Tuesday, extending gains from Monday, when Saudi Arabia -- the world's top oil exporter -- said it would limit oil exports in August. It was crude's biggest one-day percentage gain since November.

Government bond prices fell ahead of the release of the Federal Reserve's latest policy statement, expected Wednesday. The yield on the 10-year U.S. Treasury note rose to 2.328% from 2.253% on Monday. Yields rise as bond prices fall.

Economists expect no change in interest rates, though some expect the central bank could announce the start date of its balance sheet runoff.

"I think there's a relatively low ceiling on where [policy] can go unless inflation kicks in," said John Maxwell, fund manager at Ivy Investments. "We don't have signs of inflation that need to be tamed."

The rise in government bond yields supported financial shares, since such moves tend to boost lending income. The KBW Nasdaq Bank Index of large U.S. commercial lenders added 1.5%.

The Stoxx Europe 600 rose 0.4% after a measure of German business confidence climbed to a record high in July. Banks, insurance companies and miners drove most of Europe's advance.

Australia's S&P/ASX 200 added 0.7%, outperforming stock markets in the region. South Korea's Kospi Composite Index fell 0.5% from a record high, snapping an eight-day winning streak.

Write to Riva Gold at riva.gold@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

July 25, 2017 16:23 ET (20:23 GMT)