Stocks rose on Tuesday after U.S. Treasury Secretary Timothy Geithner said the vast majority of banks are well capitalized, soothing worries over the need for the struggling sector to raise more money.
A forecast from diversified manufacturer United Technologies Corp
Financials were the best-performing sector in the broad S&P 500 index <.SPX> after Geithner said most U.S. banks have enough capital to keep lending, but bad debts are slowing a recovery.
Geithner's testimony before a Congressional panel came the day after fears about the results of government stress tests on the adequacy of banks' capital levels dragged down bank shares as the market posted its biggest drop since March 5.
There was concern that the stress tests might indicate that a lot of the banks needed additional capital, but his comment was that the majority of banks are adequately capitalized, said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
The Dow Jones industrial average <.DJI> rose 62.84 points, or 0.80 percent, to 7,904.57. The Standard & Poor's 500 gained 9.64 points, or 1.16 percent, to 842.03. The Nasdaq Composite Index <.IXIC> climbed 18.43 points, or 1.15 percent, to 1,626.64.
Investors also digested another round of quarterly results, including reports from five blue-chip companies. Merck & Co Inc
Merck was down 6 percent at $23.72, while Coke fell 2.2 percent to $43.34.
The technology sector saw another day of M&A activity after chipmaker Broadcom Corp
Broadcom was down 9 percent at $19.85, while Emulex surged 43 percent to $9.45.
Shares of United Tech, the world's largest maker of elevators and air conditioners, rose 4.3 percent to $47.79 and led gains in the Dow industrials after the company beat profit expectations and said that although order rates remained down there were signs of stabilization, especially in China.
The KBW bank index <.BKX> rose 4.7 percent, reversing earlier declines after Geithner's comments, with Bank of America Corp
(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)