Stocks rose on Tuesday as a solid profit from Caterpillar Inc
Trading was choppy, with the broader market initially charging higher after the open and the benchmark S&P 500 <.SPX> hitting a fresh 2009 intraday high as it extended its rebound from the 12-year closing low of early March.
A late push helped the Nasdaq eke out a small gain for its 10th straight winning session, the longest in 12 years.
With Apple Inc
Drugmaker Merck & Co
But that profit optimism collided with a dose of reality as heavy equipment maker Caterpillar, another Dow component, warned the current quarter could be tough.
In addition, U.S. Federal Reserve Chairman Ben Bernanke said in testimony before a congressional panel that mounting joblessness, slumping home values and tight credit were likely to curb consumer spending -- a major driver of U.S. economic growth and corporate profits.
People can get a bit euphoric with a couple of positive economic numbers and earnings ... but you're going to have to see how this pans out over the long term, said Stephen Carl, principal and head of U.S. equity trading at The Williams Capital Group in New York.
I think you do a little profit-taking now, go through the summer and see how the rest of second-quarter earnings come out, and then kind of ascertain what's going on after that.
The Dow Jones industrial average <.DJI> gained 67.79 points, or 0.77 percent, to 8,915.94. The Standard & Poor's 500 Index <.SPX> rose 3.45 points, or 0.36 percent, to 954.58. The Nasdaq Composite Index <.IXIC> added 6.91 points, or 0.36 percent, to 1,916.20 -- a closing high for the year.
FROM MARCH LOW, S&P JUMPS 41 PCT
The S&P 500 is now up 41 percent from the 12-year closing low of March 9.
Shares of Caterpillar, up 7.8 percent at $39.46, provided the Dow's top boost, but finished below the day's high after the company said it expected the third quarter to be the year's weakest and extremely challenging.
Merck said second-quarter earnings fell, hurt by lower sales of its cholesterol drugs, but income from partnerships and a rebound in sales of asthma drug Singulair helped the drugmaker beat profit forecasts. The stock, up 6.1 percent at $29.65, ranked as the Dow's second-biggest advancer. The pharmaceuticals index <.DRG> was up 1.6 percent.
But shares of United Technologies Corp
On Nasdaq, shares of iPod and iPhone maker Apple Inc
CIT SINKS BELOW $1
Troubled lender CIT Group Inc
Also on the defensive were shares of Regions Financial Corp
In regulatory news, the U.S. Treasury Department sent to Congress a draft bill that would curb the power of credit ratings agencies.
Volume was moderate on the New York Stock Exchange, with 1.21 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.28 billion shares traded, matching last year's daily average.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 8 to 7, while on the Nasdaq, the opposite trend prevailed: About five stocks fell on Nasdaq for every three that rose.
(Editing by Jan Paschal)