By Tomi Kilgore
U.S. stocks rose Tuesday, extending the previous session's sharp
gains, as upbeat earnings reports from blue-chip companies helped
set a positive tone.
The Dow Jones Industrial Average climbed 98 points, or 0.6%, to
16271.
The S&P 500 index rallied 12 points, or 0.7%, to 1843 and
the Nasdaq Composite Index advanced 28 points, or 0.7%, to
4051.
On Monday, stocks staged a broad rally as investors focused on
strong retail sales data and better-than-expected earnings from
banking giant Citigroup. The Dow climbed 146 points, or 0.9%, on
Monday, while the recently hard hit Nasdaq Composite Index gained
0.6%.
Earnings from Dow components helped support sentiment early
Tuesday. Coca-Cola gained 2.4% after first-quarter adjusted
earnings met estimates, while revenue rose slightly above
forecasts, amid an increase in world-wide case volume. And Johnson
& Johnson rose 1.8% after reporting better-than-expected
first-quarter earnings and raising its full-year outlook.
Fellow Dow member Intel, which is slated to report results after
the close, advanced 0.9%.
The market's second-straight day of gains offered investors a
reprieve from the downturn stocks have suffered this month, as
investors worried that first-quarter earnings may not be strong
enough to support high valuations. Until Monday's bounce, the
S&P 500 had fallen 4% since closing at a record high on April
2, while the Nasdaq had dropped 8.2% since closing at a 14-year
high on March 5.
Many investors remain upbeat on stocks in the long term, given
an improving economy and an accommodative Federal Reserve. But they
expect some additional volatility in the near term, especially in
once-highflying biotechnology stocks and shares of relatively young
Internet companies.
Adam Grimes, chief investment officer at Waverly Advisors, which
provides tactical research and advisory services to traders and
money managers, expects more volatility in the short term, as the
market is no longer acting like it did during last year's strong
bull run. "This is a market that is reminding us that it doesn't
have to go straight up," Mr. Grimes said.
For long-term investors, however, Mr. Grimes said the market
still looks very bullish, so they should just "sit tight" in the
current volatile market environment. "You don't necessarily want to
be buying dips, but you don't want to be selling into them,
either," Mr. Grimes said. "It is a time for no action."
On the economic data front, the New York Federal Reserve's
Empire State index of manufacturing activity for April fell to 1.3
from 5.61 in March, versus expectations of a rise to 8.0. Readings
above zero indicate improving conditions.
Separately, the consumer-price index for March rose 0.2% on the
month versus forecasts of a 0.1% rise. Excluding food and energy,
core CPI also grew 0.2%, topping estimates of a 0.1% rise.
The yield on the 10-year Treasury note ticked up to 2.652% from
2.637% late Monday.
Crude-oil futures eased 0.7% to $103.32 a barrel, after settling
at a six-week high on Monday. Gold futures dropped 2.4% to
$1,295.40 an ounce amid concerns that China's appetite for the
precious metal may be waning. The dollar gained against the euro,
but eased slightly against the yen.
European markets eased, with investors cautious following a
recent flare-up of tensions in Ukraine and soft economic data out
of Germany. The Stoxx Europe 600 slipped 0.1%, while Germany's DAX
30 index gave up 0.5%.
In Asia, China's Shanghai Composite dropped 1.4% ahead of the
release of the nation's first-quarter growth numbers on Wednesday.
Japan's Nikkei Stock Average gained 0.6% to bounce off a six-month
closing low on Monday.
In other corporate news, Motorola Solutions advanced 0.2% after
the company agreed to sell its enterprise business to Zebra
Technologies for $3.45 billion in cash. Zebra's stock tacked on
0.3%.
Yahoo rose 1.1% ahead of first-quarter results due after the
close. Yahoo has been one of the harder hit stocks during the
recent market weakness. The stock has lost 6% so far this month,
and 16% this year.
General Electric slipped 0.1% after The Wall Street Journal
reported the company's chief executive officer Jeff Immelt may give
up leadership of the industrial conglomerate sooner than his
expected 20-year tenure. Mr. Immelt has run GE for 13 years, but he
and fellow directors are re-evaluating the right term for its
CEO.
Charles Schwab rose 2.6% after the discount brokerage reported
first-quarter earnings that rose above analyst forecasts, as new
assets and profit margins increased.
Write to Tomi Kilgore at tomi.kilgore@wsj.com.