Encouraging results from health care and materials companies lifted U.S. stocks on Tuesday, but weak earnings from Goldman Sachs limited gains in a market skeptical of the growth outlook.
Investors were reluctant to make big bets as the market readied for a spate of high-profile earnings. Volume was extremely low, with 6.65 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.
Johnson & Johnson
Offsetting that was Goldman Sachs Group Inc
Unless the performance of financials and tech stocks improves, then I think the market could be in store for a correction, said Marshall Front, chairman and chief investment officer of Front Barnett Associates in Chicago. These are important groups that point toward future economic activity.
The S&P Financial Index<.GSPF> is down 3.8 percent from a recent high reached on April 7, while the S&P Information Technology Index <.GSPT> is down 2 percent over the same period.
A trio of major tech companies beating revenue expectations after the market's close suggested an encouraging trend for the group. Dow component Intel Corp
International Business Machines Corp
Materials were the S&P's top percentage gainers during the regular session. The rally in the materials sector came a day after Steel Dynamics
The Dow Jones industrial average <.DJI> gained 65.16 points, or 0.53 percent, to 12,266.75 at the close. The Standard & Poor's 500 Index <.SPX> added 7.48 points, or 0.57 percent, to 1,312.62. The Nasdaq Composite Index <.IXIC> advanced 9.59 points, or 0.35 percent, to 2,744.97.
The market seemed to have moved past Monday's surprising announcement that Standard & Poor's was revising its outlook downward on the United States credit rating.
People are acknowledging that it is still very unlikely that there could be a downgrade of the U.S., but still there are a lot of concerns about what could happen with all these government debt problems, said Charles Bobrinskoy, vice chairman of Ariel Investments LLC in Chicago, which oversees about $5.5 billion.
Home builders' shares also rose after government data showed U.S. housing starts and permits for future home construction rose more than expected in March.
The Dow Jones U.S. home construction index <.DJUSHB> rose 2.2 percent. PulteGroup
Texas Instruments Inc
About two stocks rose for every one that fell on the New York Stock Exchange, while on the Nasdaq, the number of advancers only slightly exceeded the number of decliners.
(Reporting by Ryan Vlastelica; Editing by Jan Paschal)