NEW YORK (CBSNewYork/AP) — Strong profits and a bipartisan plan to lift the U.S. debt limit drove a stock market rebound Tuesday.
Stock indexes rose after Coca-Cola, IBM and other companies reported better second-quarter earnings. The indexes added to their gains in the afternoon after President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country’s $14.3 trillion debt ceiling.READ MORE: FBI Says Body Found In Grand Teton National Park Believed To Be Gabby Petito
The Dow Jones industrial average gained 202.26 points, or 1.6 percent, to close at 12,587.42. That’s the Dow’s largest one-day jump this year.
“It looks like there’s bipartisan support for a robust plan,” said Burt White, chief investment officer at LPL Financial in Boston. “The stock market had been looking for a reason to have a relief rally. And it looks like they got the start of one today.”
The ongoing deadlock in Washington over raising the country’s borrowing limit and Europe’s debt crisis have been weighing on markets this month. The Dow slid five of the previous seven days.
The S&P 500 index rose 21.29 points, or 1.6 percent, to 1,326.73. That’s the broader index’s best day since March 3. The Nasdaq gained 61.41 points, or 2.2 percent, to 2,826.52.
Tuesday’s gains turned the three major indexes positive for the month. The Dow and Nasdaq are now up more than 1 percent in July. The S&P 500 is up 0.5 percent.
Information technology stocks led industry groups higher after IBM Corp.’s results beat analysts’ estimates. Corporate software spending held steady during the quarter. IBM’s stock rose 5.7 percent.
The tech gains could continue Wednesday. Apple Inc. reported another surge in earnings after the stock market closed as sales of iPhones and iPads again set records. The stock rose 6 percent to $399.53 in after-hours trading.
Coca-Cola Co.’s income increased 18 percent in the second quarter on stronger sales overseas. The world’s largest beverage maker raised some prices to offset higher ingredient costs. Coca-Cola’s stock was up 3.3 percent.
KeyCorp rose 4.3 percent after the Cleveland-based banking company reported a jump in earnings thanks to a drop in loan losses. The bank reported income of 25 cents a share, up from 3 cents a share a year ago.READ MORE: Public School 79 In East Harlem To Remain Closed Due To COVID-19 Cluster; Remote Learning In Place Until Sept. 28
Harley-Davidson Inc. rose 8.9 percent, making it the top performing stock in the S&P 500 index. The motorcycle maker reported its first increase in U.S. sales since the final quarter of 2006. Sales of its motorcycles, some of which sell for more than $30,000, had languished throughout the economic slump.
A jump in housing construction lifted the stocks of Lennar Corp. and D.R. Horton Inc. The Commerce Department said building of new houses and apartments increased 14.6 percent in June from the previous month. Single-family house construction rose 9.4 percent, the largest increase since June 2009, the month that marked the end of the recession. Much of the monthly increase, however, came from new apartment buildings.
Bank stocks were mixed. Wells Fargo & Co.’s profit soared 30 percent to 70 cents per share on stronger results from lending. Uncollected loans dropped for the sixth quarter in a row. The bank’s stock gained 5.6 percent.
Both Bank of America Corp. and Goldman Sachs Group Inc. fell after posting disappointing results.
Bank of America lost 90 cents per share. That’s more than analysts polled by data provider FactSet expected. The loss included a $8.5 billion settlement the bank paid to mortgage-bond investors.
Goldman’s earnings more than doubled to $1.85 per share, up from 78 cents a year ago. But a drop in bond trading kept results from hitting the analysts’ estimates of $2.35 per share.
Two weeks are left before the Treasury Department says the government must lift the country’s $14.3 trillion borrowing limit or risk defaulting on its obligations.
Most economists say that if the world’s largest economy reneges on its debts, the consequences would be catastrophic. In testimony last week, Federal Reserve Chairman Ben Bernanke said a default would be a “calamitous outcome” and “create a severe financial shock.”
Bernanke said U.S. government bonds are so widely used in global finance that if faith in them were undermined it would have far-reaching and unexpected consequences.
Four stocks rose for every one that fell on the New York Stock Exchange. Trading volume was below average at 3.9 billion shares.MORE NEWS: NYC Restaurant Owners Sound Off On Vaccine Mandate
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