Stocks climbed on Tuesday, with all indexes briefly above 1 percent after better-than-expected results from Alcoa Inc and CSX Corp gave a promising start to the earnings season and sparked a broad rally.
Alcoa, the first Dow component to report, posted second-quarter earnings that beat expectations late on Monday, raising hopes of similarly strong results for other companies. Rail company CSX also posted a higher-than-expected profit.
Alcoa and CSX are core industrial companies that had nothing but good things to say, making it harder to find evidence of this double-dip recession we were worried about a month ago, said James Meyer, chief investment officer at Tower Bridge Advisors in West Conshohocken, Pennsylvania.
Alcoa gained 1.9 percent to $11.08 while CSX was up 1.8 percent at $53.43.
Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ratio of 12 to one, while on the Nasdaq, eight stocks rose for every one that fell.
Investors have been eagerly awaiting the season for confirmation that a recent rally was justified. Last week, the S&P posted its strongest week of the year, rising more than 5 percent.
Earnings will continue to be reported in full force, with bellwether Intel Corp's results scheduled for release after the market closes, and JPMorgan Chase & Co and General Electric Co on tap for later this week.
I'm expecting strong results from both Intel and JPMorgan, but there's no question that their results are key if we're going to keep moving forward, Meyer said.
The Dow Jones industrial average <.DJI> was up 105.88 points, or 1.04 percent, at 10,322.15. The Standard & Poor's 500 Index <.SPX> was up 10.84 points, or 1.00 percent, at 1,089.59. The Nasdaq Composite Index <.IXIC> was up 19.12 points, or 0.87 percent, at 2,217.48.
Even as traders focused on earnings, the euro zone crisis remained in view as ratings agency Moody's Investor Service cut its rating on Portugal by two notches to A1. Separately, the U.S. trade deficit unexpectedly widened in May, though this was also ignored by the markets.
U.S.-listed shares of BP Plc rose 1.1 percent to $37.13 as the company prepared to try and seal off its runaway well in the Gulf of Mexico with a new cap that it says could finally arrest the flow of oil.
American International Group Inc rose 1.9 percent to $36.23. The company's board is set to meet this week to consider the future of its AIA unit, with a public float seen as the most likely outcome, sources said on Tuesday.
(Editing by Chizu Nomiyama)