US stocks jump in early trading on strong earnings

By DANIEL WAGNER

The Dow Jones industrial average rallied for a second day Tuesday after big U.S. companies posted strong quarterly profits and the Spanish government reassured investors with a successful debt auction.

Coca-Cola leapt 2.5 percent after the company reported that its net income rose 8 percent in the first three months of the year, topping the forecasts of Wall Street analysts. Revenue rose six percent.

U.S. stock indexes followed European markets higher after the Spanish government sold more than (EURO)3.2 billion ($4.2 billion) in short-term debt, more than had been expected. Investors demanded high interest rates, reflecting continued uncertainty about Spain's finances.

The mood in Europe is improving. The yield on Spain's 10-year government bond fell to 5.86 percent from 6.10 percent early Monday, a sign of improving confidence in the country's finances. Benchmark indexes in France and Germany rose 1.5 percent.

Major U.S. indexes gained a percent or more. The Dow Jones industrial average rose 132 to 13,053 as of 10:20 a.m. The Standard & Poor's 500 index rose 13 to 1,383. The Nasdaq composite index rose 37 to 3,025.

The rally was broad, with gains across 9 of the 10 industry groups in the S&P 500 and 18 of the 20 stocks that make up the Dow.

Goldman Sachs rose slightly after the Wall Street bank raised its quarterly dividend, saying one measure of profit more than doubled in the first three months of the year. Johnson & Johnson, a Dow component, lost a percent despite boosting its profit by 12.5 percent.

Both Goldman and Johnson & Johnson made up with falling revenue by cutting costs aggressively. Goldman laid off 2,000 workers over the past year.

Some traders appeared confident that the current batch of earnings will continue to bring good news. Several companies that will report later Tuesday, including IBM and Yahoo, rose more than the broader market.

The rally followed a batch of mixed economic news. The number of permits requested by homebuilders for future projects reached a 3 1/2-year high, an indication that the housing market might stop weighing down the economy.

But builders broke ground on new homes at a slower pace in March. The rate of construction and requested permits is just half of what would signal a healthy housing market.

Economists watch the new homes figure closely because every new home generally means three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.

The Federal Reserve said that output by U.S. factories fell in March because companies made fewer electronic products, steel and metals. The decline, made March the second straight month in which overall industrial production was flat.

Industrial production includes the output of the nation's factories, mines and utilities.

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Daniel Wagner can be followed at www.twitter.com/wagnerreports.