Published October 16, 2012
NEW YORK – U.S. stocks rose on Tuesday after earnings from Johnson & Johnson and other bellwether companies beat expectations, raising hopes for the rest of the U.S. reporting season.
Dow components Johnson & Johnson and UnitedHealth Group both increased their full-year profit views while Goldman Sachs raised its dividend.
Goldman Sachs also posted earnings that beat expectations and revenue that more than doubled, but it earned less money from customers' trading and its stock fell 1.2 percent to $122.95. The results followed upbeat earnings from Citigroup Inc in the previous session.
"There may be a push upwards, depending on results, but we'll be waiting until economic indicators improve," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.
Shares of Johnson & Johnson, the diversified U.S. healthcare company, rose 1.2 percent to $69.42. In contrast, UnitedHealth shed 1.2 percent to $56.82.
The S&P 500 is on track for its second consecutive advance, and its best two-day run in a month on the heels of last week's 2.2 percent slide. That was the benchmark index's worst weekly decline in four months as investors looked for more evidence on the global economic climate from large multinational companies.
The Dow Jones industrial average rose 111.13 points, or 0.83 percent, to 13,535.36. The Standard & Poor's 500 Index shot up 12.19 points, or 0.85 percent, to 1,452.32. The Nasdaq Composite Index added 31.66 points, or 1.03 percent, to 3,095.84.
The blue-chip Dow average is set to mark its biggest one-day percentage gain since September 13, when the Federal Reserve unveiled its third round of stimulus, or quantitative easing, known as "QE3."
Coca-Cola Co also reported a rise in earnings, but quarterly revenue came in short of Wall Street's expectations, hurt by declines in Europe and Asia. Its stock lost 1.3 percent to $37.65.
Citigroup unexpectedly announced that Chief Executive Vikram Pandit had resigned effective immediately, along with Chief Operating Officer John Havens. Michael Corbat, previously chief executive for Europe, Middle East and Africa, was named to succeed Pandit.
"It certainly is a bit of a shock," said Jeff Morris, head of U.S. equities at Standard Life Investments in Boston. "Certainly the transitioning and the messaging was more abrupt than I think anybody would have anticipated."
Shares of Citigroup rose 0.5 percent to $36.84.
Intel and International Business Machines Corp are scheduled to report earnings after the closing bell. Their results will be among the first major earnings reports from the tech sector, which has been hit by a number of profit warnings, including from Intel.
Shares of Intel rose 2.3 percent to $22.23. IBM shares rose 0.7 percent to $210.42.
Economic data showed the overall U.S. Consumer Price Index rose 0.6 percent in September as the cost of gasoline surged, posing a threat to consumers' spending power. On the other hand, inflation pressures looked unlikely to derail the Federal Reserve's ultra-easy policy path. Excluding volatile food and energy prices, core CPI was up 0.1 percent - less than the forecast for a gain of 0.2 percent.
(Reporting by Caroline Valetkevitch; Additional reporting by Atossa Araxia Abrahamian; Editing by Jan Paschal)