U.S. stocks rose on Tuesday after an upbeat profit forecast from Bank of America and a pullback in oil prices, which could lead to further gains if the Dow mounts a key level.
In the financial sector, Bank of America Corp
Oil prices pulled back, with Brent crude down nearly 2 percent at $112.82 a barrel after Kuwait's oil minister said OPEC was in discussions to increase production.
Turmoil in Libya and unrest in the region have driven up oil prices to 2 1/2-year highs recently.
The market is still trying to deal with the turmoil in the Mideast, and (with) any kind of pullback in oil prices, we've seen the effect where the market has jumped rather significantly, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
Zaro said a major selloff in oil, along with reduced worries about supply, could be the catalyst to push stocks out of their recent range. A break above 12,300 on the Dow would be significant and could mean further gains, he said.
Stocks have been closely tied to oil prices recently as investors worried that consumer spending may be curtailed by higher oil and gas prices, choking off an economic recovery.
The Dow Jones industrial average <.DJI> was up 140.02 points, or 1.16 percent, at 12,230.05. The Standard & Poor's 500 Index <.SPX> was up 13.01 points, or 0.99 percent, at 1,323.14. The Nasdaq Composite Index <.IXIC> was up 27.40 points, or 1.00 percent, at 2,773.03.
The S&P has advanced about 25 percent since a rally started in September.
However, in another move of technical significance, the S&P 500 closed on Monday below a trend line it had held for more than six months that connected lows in late August and late November, suggesting momentum was waning.
On Tuesday, Libyan warplanes struck at rebel forces, stepping up government efforts to roll back early gains in the revolt against Muammar Gaddafi.
Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia, said his firm was overweight on the energy sector, which has helped to offset some of the market decline following the Libyan unrest.
On the negative side, shares of online rental service Netflix Inc
Netflix has been among the market's top performers in the recent rally and has risen 56 percent since the start of September.
(Additional reporting by Rodrigo Campos; Editing by Kenneth Barry)