Stocks rallied on Tuesday as oil prices dipped and a major investment bank released a bullish report on the chip sector. Investors shrugged off a lower than expected reading on a key manufacturing gauge for February.
The Dow Jones industrial average was up 63.77 points, or 0.59%, to 10,830. The broader Standard & Poor's 500 index was up 6.81 points, or 0.57%, to 1,210.41. The Nasdaq composite index gained 19.53 points, or 0.95%, moving to 2,071.25.
Looking ahead, several companies are due to report earnings on Wednesday. On the docket are discount retailer Costco Wholesale (COST), women's apparel retailer Liz Claiborne (LIZ) and AutoZone (AZO).
In economics news, investors are awaiting word from Federal Reserve Chairman Alan Greenspan, who is scheduled to testify on the economic outlook before the House Budget Committee at 10:00 a.m. ET.
On Tuesday, leading the market higher were some brokerage upgrades of key chip stocks. Intel (INTC) was raised to overweight and Texas Instruments (TXN) was increased to neutral by JPMorgan Chase, according to wire reports.
A key report on manufacturing activity in February was slightly than lower than expected but still showed expansion. The Institute of Supply Management's gauge came in at 55.3 while a reading of 57 had been expected. The gauge registered 56.4 in January. Still, any reading above 50 is considered expansion.
In other economics news, construction spending rose 0.7% in January, compared to the previous month's 1.2% gain and market expectations for a 0.8% advance.
Meantime, NYMEX April crude futures were trading at around $51.60 per barrel, which was below Monday's close of $51.75 per barrel, says Informa Global Markets. Crude hit a new recent high overnight on cold weather in the U.S. Northeast and continued evidence OPEC is comfortable with current prices. U.S. weather forecasts call for more cold weather this week with snow fall through Wednesday and again on Saturday. Overnight, some OPEC officials sounded a bit more dovish on crude supplies than earlier.
In earnings news, hog and pork producer Smithfield Foods (SFD) posted quarterly profits that more than doubled from the year-ago quarter as hog prices rose 48%.
Drug stocks were helped by France's Sanofi-Aventis (SNY) which posted 18% higher profit, topping expectations.
Not all news was positive. Financial services outfit Marsh & McLennan (MMC) posted a quarterly loss due to restructuring and legal settlements.
In merger news, Qwest Communications (Q) said it could wring $14.8 billion in cost reductions from a merger with long-distance phone company MCI (MCIP). The deal could lead to 15,000 job cuts.
Treasuries ended little changed in price Tuesday with the yield on the 10-year note finishing at 4.37%.
European stock markets closed higher on Tuesday. In London, the Financial Times-Stock Exchange 100 was up 32 points, or 0.64%, to 5,000.50 as upbeat results from Schroders and BAT offset a profit warning from Boots.
Germany's DAX index rose 33.13 points, or 0.76%, to 4,383.62 but German performances are very mixed and sentiment is shaky after Germany's unemployment for February increased by 161,000 vs. expectations of a 80,000 increase. On the positive side, the latest stream of earnings reports provides good reasons to trade. Linde is amongst key Dax gainers as brokers consider the group's key metrics as good, following yesterday's results.
In Paris, the CAC 40 index gained 27.82 points, or 0.69%, to 4,054.98 with stocks extending morning gains, supported by Sanofi, Axa, and France Telecom, the latter recovering from a shaky start.
Asian markets closed mixed on Tuesday. Japan's Nikkei-225 index rose 39.93 points, or 0.34%, to close at 11,780.53, closing at a fresh eight-month high. Local steel makers climbed on strong industrial output data. Nippon Steel, JFE Holdings and Sumitomo Metal went up 1.0%, 1.9% and 2.2%, respectively.
In Hong Kong, the Hang Seng Index lost 134.20 points, or 0.95%, to 14,061.15 Hong Kong, with index heavyweight HSBC Holding sliding after the bank's 2004 results fell at the low end of market forecasts.