NEW YORK (AFX) -- U.S. stocks ended higher Tuesday as a number of solid earnings reports and a rally in oil, mining and metals shares fueled by higher commodity prices lifted the Dow Jones Industrial Average to a six-year high and the S&P 500 Index to its best level in more than five years.
Investors said Federal Reserve Chairman Ben Bernanke's reported concern that the market had misinterpreted recent remarks on monetary policy, which sparked late selling to take stocks lower on Monday, did little to change the interest-rate outlook.
The Dow industrials rose 73.16 points to 11,416.5, its best closing level since January 2000. Of the 30 Dow stocks, 23 contributed to gains.
The Nasdaq Composite Index rose 5.05 points to 2,309.84.
The S&P 500 Index added 8.02 points to end at 1,313.21, its best closing level since February 2001.
'This has been a very powerful earnings season and that's what's been driving the market,' said Hugh Johnson, chairman of Johnson Illington Advisors.
Although the S&P and the Dow ended at multiyear highs, the Nasdaq is struggling to move higher.
For Michael Malone, trading analyst at Cowen & Co, the Nasdaq's relative underperformance stems from growing concern about the outlook for the technology sector, with investors preferring to move into sectors with more momentum, like basic materials and energy.
'It's a play on global growth, with countries like China that still have a lot of room to run,' he said.
On the broader market for equities, advancers outpaced decliners by 20 to 11 on the New York Stock Exchange and by 17 to 13 on the Nasdaq.
By sector, utilities , networkers , gold stocks , energy and oil services put in significant gains.
Biotechs and banks were the most notable decliners.
Volume was 1.71 billion on the Big Board and 2.12 billion on the Nasdaq.
The market continued to mull a CNBC report Monday that Bernanke told one its anchors that he felt the media had misinterpreted his words last week as a signal that the Fed would stop tightening monetary policy after one more rate hike.
'The market is getting pretty comfortable with the idea that maybe 5% is not 'one and done' and that it will be 'one and a pause,'' said John Caldwell, investment strategist at McDonald Financial Group. 'Last time I looked at the futures, there was a still a reasonable chance of the market pricing another 25 basis-point hike at the June meeting.'
After CNBC reported the Fed chief's remarks, the federal funds futures market priced in a higher probability of continued rate increases. The July contract is now pricing in a 71% chance that federal funds will be at 5.25% after the next two Fed meetings, compared with a 66% chance on Monday. Federal funds currently stand at 4.75%.
Caldwell said that recent economic reports, such as Monday's personal-income and consumer-spending data, and the Institute for Supply Management's latest survey showing the manufacturing sector in robust health would have raised 'red flags' at the central bank.
'Because the Fed has said it's data-dependent, I think the market is going to be the same way,' he added.
For Cowen & Co.'s Malone, the unusual way in which Bernanke's remarks came to light left investors 'unsure how to digest' them.
'You had some other Fed commentary yesterday such as Fed President Guynn, which suggested the Fed was at least close to pausing. So the general thinking is still that it is close to taking a pause.'
Malone, however, said Bernanke had made clear in his congressional testimony last week that it didn't necessarily mean an end to further rate rises, and that he remained concerned about inflation.
Oil, dollar, gold, bonds
Crude futures ended near $75 a barrel as Iran's nuclear standoff with the West continued to grab the spotlight. Iran's deputy oil minister predicted prices would rise to $100 a barrel this winter as demand exceeds supply.
Political unrest in Nigeria, another leading oil exporter, and Bolivia's decision to turn over all natural-gas and oil sales to a state-owned company also lent support. Crude for June delivery ended up 91 cents at $74.61 a barrel.
On the currency markets, the U.S. dollar gave up further ground against the euro and was lower against the British pound on strong U.K. and eurozone manufacturing data.
The euro last rose 0.3% to $1.2620 while sterling rallied 1% to $1.84. Against the Japanese yen, the greenback was off 0.2% at 113.42.
Gold futures ended a fresh 25-year high, fueled by a weak dollar, a jump in energy prices and concern about Iran's nuclear program. Gold for June delivery closed up $7.20 at $667.40 an ounce.
In the bond market, long-term Treasury prices rose, sending yields lower. The benchmark 10-year note was up 8/32 at 95 11/32, with its yield at 5.11%.
Stock standouts
Verizon Communications Inc. dipped 15 cents to $32.64 after the telecom operator and Dow component posted adjusted quarterly results that topped analysts' estimates. The company also said that it added 541,000 high-speed Internet customers and 1.7 million wireless subscribers in the March quarter.
Also on the move, Sirius Satellite Radio Inc. rose 5.6% to $4.88 after the satellite-radio provider posted a narrower than expected first-quarter loss and registered a sharp rise in the number of subscribers using its services.
Home builders came under pressure after key player Hovnanian Enterprises Inc. cut its second-quarter and full-year earnings forecasts late Monday due to production delays, slower sales and other issues that suggest the company is feeling the effects of a cooling U.S. housing market. Hovnanian's shares were off 6.2% at $36.39.
Car sector in focus
Automotive stocks are in focus as the Big Three and their overseas rivals release April sales figures.
General Motors Corp. shares rose 2.5% to $23.21 as investors took heart from a 2% rise in truck sales in April, adjusted for one less selling day than in the year-ago month. Car sales, however, tumbled 18%. The automaker also raised its second-quarter production outlook.
Ford Motor Co. , for its part, posted a 7% decline in April sales, hurt by a sharp decline in truck sales. Its auto division fared better than GM's, posting an 8% gain on an adjusted basis. The stock ended unchanged at $6.91.
DaimlerChrysler posted a 6% fall in April sales. The stock dipped 19 cents at $54.41.
Japanese automakers fared fare better, with both Honda Motor Co. and Toyota Motor Corp. notching solid monthly gains.
Also in the sector, shares of Visteon Corp. surged 18.6% to $6.95 after the auto-parts maker swung to a first-quarter profit as it shed plants and returned control of a group of factories to former parent Ford.
Broker action
In broker action, J.P. Morgan reshuffled its recommendations in the airline sector as it turned more positive on the industry, saying a resumption of growth is likely next year.
The broker upgraded Southwest Airlines Co. and Alaska Air Group to overweight from neutral, but at the same time cut JetBlue Airways Corp. to underweight from overweight and lowered Frontier Airlines Holdings Inc. to underweight from neutral. This story was supplied by MarketWatch. For further information see www.marketwatch.com.
Investors said Federal Reserve Chairman Ben Bernanke's reported concern that the market had misinterpreted recent remarks on monetary policy, which sparked late selling to take stocks lower on Monday, did little to change the interest-rate outlook.
The Dow industrials rose 73.16 points to 11,416.5, its best closing level since January 2000. Of the 30 Dow stocks, 23 contributed to gains.
The Nasdaq Composite Index rose 5.05 points to 2,309.84.
The S&P 500 Index added 8.02 points to end at 1,313.21, its best closing level since February 2001.
'This has been a very powerful earnings season and that's what's been driving the market,' said Hugh Johnson, chairman of Johnson Illington Advisors.
Although the S&P and the Dow ended at multiyear highs, the Nasdaq is struggling to move higher.
For Michael Malone, trading analyst at Cowen & Co, the Nasdaq's relative underperformance stems from growing concern about the outlook for the technology sector, with investors preferring to move into sectors with more momentum, like basic materials and energy.
'It's a play on global growth, with countries like China that still have a lot of room to run,' he said.
On the broader market for equities, advancers outpaced decliners by 20 to 11 on the New York Stock Exchange and by 17 to 13 on the Nasdaq.
By sector, utilities , networkers , gold stocks , energy and oil services put in significant gains.
Biotechs and banks were the most notable decliners.
Volume was 1.71 billion on the Big Board and 2.12 billion on the Nasdaq.
The market continued to mull a CNBC report Monday that Bernanke told one its anchors that he felt the media had misinterpreted his words last week as a signal that the Fed would stop tightening monetary policy after one more rate hike.
'The market is getting pretty comfortable with the idea that maybe 5% is not 'one and done' and that it will be 'one and a pause,'' said John Caldwell, investment strategist at McDonald Financial Group. 'Last time I looked at the futures, there was a still a reasonable chance of the market pricing another 25 basis-point hike at the June meeting.'
After CNBC reported the Fed chief's remarks, the federal funds futures market priced in a higher probability of continued rate increases. The July contract is now pricing in a 71% chance that federal funds will be at 5.25% after the next two Fed meetings, compared with a 66% chance on Monday. Federal funds currently stand at 4.75%.
Caldwell said that recent economic reports, such as Monday's personal-income and consumer-spending data, and the Institute for Supply Management's latest survey showing the manufacturing sector in robust health would have raised 'red flags' at the central bank.
'Because the Fed has said it's data-dependent, I think the market is going to be the same way,' he added.
For Cowen & Co.'s Malone, the unusual way in which Bernanke's remarks came to light left investors 'unsure how to digest' them.
'You had some other Fed commentary yesterday such as Fed President Guynn, which suggested the Fed was at least close to pausing. So the general thinking is still that it is close to taking a pause.'
Malone, however, said Bernanke had made clear in his congressional testimony last week that it didn't necessarily mean an end to further rate rises, and that he remained concerned about inflation.
Oil, dollar, gold, bonds
Crude futures ended near $75 a barrel as Iran's nuclear standoff with the West continued to grab the spotlight. Iran's deputy oil minister predicted prices would rise to $100 a barrel this winter as demand exceeds supply.
Political unrest in Nigeria, another leading oil exporter, and Bolivia's decision to turn over all natural-gas and oil sales to a state-owned company also lent support. Crude for June delivery ended up 91 cents at $74.61 a barrel.
On the currency markets, the U.S. dollar gave up further ground against the euro and was lower against the British pound on strong U.K. and eurozone manufacturing data.
The euro last rose 0.3% to $1.2620 while sterling rallied 1% to $1.84. Against the Japanese yen, the greenback was off 0.2% at 113.42.
Gold futures ended a fresh 25-year high, fueled by a weak dollar, a jump in energy prices and concern about Iran's nuclear program. Gold for June delivery closed up $7.20 at $667.40 an ounce.
In the bond market, long-term Treasury prices rose, sending yields lower. The benchmark 10-year note was up 8/32 at 95 11/32, with its yield at 5.11%.
Stock standouts
Verizon Communications Inc. dipped 15 cents to $32.64 after the telecom operator and Dow component posted adjusted quarterly results that topped analysts' estimates. The company also said that it added 541,000 high-speed Internet customers and 1.7 million wireless subscribers in the March quarter.
Also on the move, Sirius Satellite Radio Inc. rose 5.6% to $4.88 after the satellite-radio provider posted a narrower than expected first-quarter loss and registered a sharp rise in the number of subscribers using its services.
Home builders came under pressure after key player Hovnanian Enterprises Inc. cut its second-quarter and full-year earnings forecasts late Monday due to production delays, slower sales and other issues that suggest the company is feeling the effects of a cooling U.S. housing market. Hovnanian's shares were off 6.2% at $36.39.
Car sector in focus
Automotive stocks are in focus as the Big Three and their overseas rivals release April sales figures.
General Motors Corp. shares rose 2.5% to $23.21 as investors took heart from a 2% rise in truck sales in April, adjusted for one less selling day than in the year-ago month. Car sales, however, tumbled 18%. The automaker also raised its second-quarter production outlook.
Ford Motor Co. , for its part, posted a 7% decline in April sales, hurt by a sharp decline in truck sales. Its auto division fared better than GM's, posting an 8% gain on an adjusted basis. The stock ended unchanged at $6.91.
DaimlerChrysler posted a 6% fall in April sales. The stock dipped 19 cents at $54.41.
Japanese automakers fared fare better, with both Honda Motor Co. and Toyota Motor Corp. notching solid monthly gains.
Also in the sector, shares of Visteon Corp. surged 18.6% to $6.95 after the auto-parts maker swung to a first-quarter profit as it shed plants and returned control of a group of factories to former parent Ford.
Broker action
In broker action, J.P. Morgan reshuffled its recommendations in the airline sector as it turned more positive on the industry, saying a resumption of growth is likely next year.
The broker upgraded Southwest Airlines Co. and Alaska Air Group to overweight from neutral, but at the same time cut JetBlue Airways Corp. to underweight from overweight and lowered Frontier Airlines Holdings Inc. to underweight from neutral. This story was supplied by MarketWatch. For further information see www.marketwatch.com.