By Chuck Mikolajczak
NEW YORK (Reuters) – U.S. stocks rallied on Tuesday to bounce from a two-day decline as financial results from Alcoa helped ease some investor worry regarding the corporate earnings season.
Alcoa Inc (AA.N) reported a higher-than-expected quarterly profit due to automotive demand, higher aluminum prices and lower energy costs. The stock opened higher but was last trading little changed at $ 16.18. [ID:nL1N0UR2DK]
Gains were broad, with each of the 10 major S&P sectors in positive territory.
Equities fell for a second straight day on Monday as another sharp decline in energy shares and growing concern over corporate profits weighed on stocks. The benchmark S&P index (.SPX) has fallen in seven of the prior nine sessions and is down about 1.7 percent from its most recent record high on Dec. 29.
“At present, equities remain an earnings-driven market, which is held hostage by oil,” said Terry Sandven, senior equity strategist at U.S. Bank Wealth Management in Minneapolis.
“On a positive note, while crude oil prices are weighing on earnings expectations for the broad market, they are bolstering consumer sentiment and adding to discretionary income levels.”
The Dow Jones industrial average (.DJI) rose 260.77 points, or 1.48 percent, to 17,901.61, the S&P 500 (.SPX) gained 25.03 points, or 1.23 percent, to 2,053.29 and the Nasdaq Composite (.IXIC) added 66.67 points, or 1.43 percent, to 4,731.38.
Financials including JPMorgan Chase & Co (JPM.N), Wells Fargo & Co (WFC.N), Goldman Sachs Group Inc (GS.N) and Citigroup Inc (C.N) are among the companies due to report this week, along with Dow component Intel Corp (INTC.O).
Fourth-quarter earnings are expected to show growth of 3.8 percent over the year-earlier period, according to Thomson Reuters data.
Oil prices remained a focus for investors after Brent (LCOc1) and U.S. crude (CLc1) touched their lowest levels in almost six years as a big OPEC producer stood by the group’s decision not to cut output.
Brent was last down 2.7 percent at $ 46.14, while U.S. crude was off 1.4 percent at $ 45.45. [ID:nL3N0US28W]
KB Home (KBH.N) gained 1 percent to $ 16.74 after the homebuilder posted fourth-quarter results, helping to lift the PHLX housing sector index (.HGX) 1.7 percent. [ID:nL3N0US4HB]
Goodyear Tire & Rubber (GT.O) lost 4.7 percent to $ 26.72 after the estimated full-year operating income growth “slightly below” its forecast of 10 to 15 percent. [ID:nL3N0US4KY]
Advancing issues outnumbered declining ones on the NYSE by 2,257 to 500, for a 4.51-to-1 ratio; on the Nasdaq, 1,798 issues rose and 468 fell for a 3.84-to-1 ratio favoring advancers.
The S&P 500 was posting 42 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 62 new highs and 10 new lows.
(Reporting by Chuck Mikolajczak; Editing by Lisa Von Ahn and Nick Zieminski)
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