RTTNews - After showing a lack of direction for much of the day, a spike in buying interest in the afternoon helped stocks to finish modestly higher on Tuesday. The major averages all finished in positive territory by solid margins, building on their recent gains.

Stocks started strong following a slew of largely promising earnings, with five Dow components reporting their quarterly results. Despite beating Wall Street estimates, Caterpillar (CAT), Coca-Cola (KO), DuPont (DD), Merck (MRK) and United Technologies (UTX) saw mixed reaction.

In other news, Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee today, stating that the U.S. economy is showing signs of stabilization and that the stimulus authorities pumped into the global economy late last year probably helped to avoid a collapse of the financial system.

Bernanke also said that the Fed is prepared to remove its stimulus when the time is appropriate in order to avoid a spike in inflation. However, he reiterated that the economy is still in a fragile state, with unemployment high and consumer spending shaky.

The Fed chief is scheduled to delivery his second day of testimony before the Senate Banking Committee Wednesday morning at 10:00 a.m. ET.

Meanwhile, President Barack Obama continued to push for the passage of his healthcare plan this afternoon, looking to gather additional support for the much-discussed bill that aims to provide universal healthcare.

The major averages moved to the upside heading into the close, finishing near their best levels of the day. The Dow advanced 67.79 points or 0.8 percent to 8,915.94, the Nasdaq climbed 6.91 points or 0.4 percent to 1,916.20 and the S&P 500 rose 3.45 points or 0.4 percent to 954.58.

Sector News

While biotechnology, chemical and pharmaceutical stocks advanced by considerable margins, other strong performers included electronic storage stocks. Notably, the NYSE Arca Disk Drive Index posted a gain of 3 percent, ending the session at its best closing level in over nine months.

Further strength was visible among telecommunication, oil service and utility stocks, while banking, airline and computer hardware stocks saw some of the day's weakest outings.

The Kbw Banking Index and the NYSE Arca Airline Index both fell by 3.1 percent, with the airline index moving off of its best closing level in over five months. The NYSE Arca Computer Hardware Index slid by 1.6 percent, pulling back off of its best closing level in over a year.

Trucking and gold stocks also pulled back on the day, with the Dow Jones Trucking Index posting a loss of 1.5 percent, while the NYSE Arca Gold Bugs Index slipped by 1.3 percent. Gold stocks suffered as the price of the precious metal fell $1.90 to $946.90 an ounce.

Dow Components

Shares of Caterpillar led the Dow higher, posting a gain of 7.7 percent on the day. The day's gain propelled the stock to its best closing price in well over six months.

Merck also helped to boost the blue chip index, rising by 6.1 percent on the session. With the upward move, shares of the pharmaceutical giant were lifted to their highest closing level in over five months.

Pfizer (PFE), Exxon Mobil (XOM) and Cisco (CSCO) also posted strong gains, although the gain by the Dow was limited by shares of Alcoa (AA), which fell by 4.3 percent. The pullback dragged Alcoa off its best closing level in nearly a month.

Further, United Technologies and General Electric (GE) fell by 1.8 percent and 1.7 percent, respectively. Both of the stocks moved off of their best levels in roughly one month's time.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. While Japan's benchmark Nikkei 225 Index posted a 2.7 percent gain, China's Shanghai Composite Index fell 1.6 percent.

Meanwhile, the major European markets all closed the day showing strong gains, with the German DAX Index and the French CAC 40 Index finishing up by 1.3 percent and 1 percent, respectively, while the U.K.'s FTSE 100 Index saw a 0.9 percent gain.

In the bond markets, treasuries jumped into positive territory during Bernanke's testimony, hovering near their best levels for the remainder of the session. Subsequently, the yield on the benchmark ten-year note fell 10.8 basis points to 3.477 percent.

Looking Ahead

Aside from additional testimony from the Fed chief on Wednesday, traders will also react to the release of quarterly results from Apple (AAPL), Yahoo! (YHOO), Advanced Micro Devices (AMD) and QLogic (QLGC) after the close of trading today.

Further, Morgan Stanley (MS), Wells Fargo (WFC), Boeing (BA), Altria (MO) and Pepsi (PEP) are also likely to draw attention, with their results on tap for tomorrow morning.

For comments and feedback: contact editorial@rttnews.com