NEW YORK – Stocks rose Tuesday, with the Nasdaq climbing to a fresh four-year high, as Wall Street welcomed strong consumer spending in June, a favorable industry outlook from chipmaker Maxim Integrated Products and higher earnings from cable operator Comcast.
The Dow Jones industrial average (search) rose 60.59 points, or 0.57 percent, to end at 10,683.74. The Standard & Poor's 500 Index (search) gained 8.77 points, or 0.71 percent, to finish at 1,244.12. The technology-laced Nasdaq Composite Index (search) climbed 22.77 points, or 1.04 percent, to end at 2,218.15, after earlier rising as high as 2,219.00.
The Russell 2000 index (search) of smaller companies rose 5.71, or 0.84 percent, to an all-time high of 688.51. The record, Russell's second lifetime high in a month, comes as investors warm to the somewhat riskier stocks that make up the index.
Tuesday's rally left the Russell 2000 small-cap index at an all-time high. The S&P Midcap also closed at its lifetime high.
You had good spending numbers, combined with the fact that the market has momentum," said Jim Awad, chairman of Awad Asset Management. "The economy is strong, inflation is low and earnings are great. That is a perfect cocktail for a bull market."
Maxim Integrated (MXIM) rose 8.3 percent, or $3.49, to $45.50 after the semiconductor maker posted a 1 percent rise in quarterly profit, in line with its month-old target, and said an industry recovery could be near. The Philadelphia Stock Exchange semiconductor index rose 2.5 percent.
Comcast (CMCSA) rose 1.3 percent, or 39 cents, to $31 after the top U.S. cable operator posted a 64 percent rise in second-quarter net income, boosted by new digital video products such as digital video recorders. Shares of rival Liberty Media International rose 1.2 percent, or 58 cents, to $48.04.
Blue-chip company Microsoft Corp. (MSFT) climbed 3.4 percent, or 89 cents, to $26.81 on speculation that the world's largest software maker is likely to raise its annual dividend.
Crude oil futures, one of Wall Street's persistent worries this summer, closed higher. A barrel of light crude settled at $61.89, up 32 cents, on the New York Mercantile Exchange (search).
Investors were pleased by the Commerce Department's (search) report that consumer spending rose 0.8 percent in June, the largest increase since April. The increase came after consumers tightened their belts in May, leaving spending flat.
Incomes grew at a nice clip of 0.5 percent in June, better than the 0.2 percent gain registered in the previous month. The pickup in income growth dovetailed with an improvement in the jobs climate in June, when the unemployment rate fell to 5 percent, a nearly four-year low.
"We're finally starting to see the markets wake up to the fact that the economy is in pretty good shape," said John Caldwell, chief investment strategist for McDonald Financial Group, which is part of Cleveland based KeyCorp. "Most of the data continues to be good."
Bonds fell, with the yield on the 10-year Treasury note at 4.33, up from 4.32 late Monday, its highest level since April. The U.S. dollar rose against the euro. Gold prices were flat.
Dow component Alcoa Inc. (AA) rose 3 percent, or 85 cents, to $28.76, lifted by higher aluminum prices.
Shares of steel companies climbed after Morgan Stanley raised its outlook for the sector.Nucor Corp. (NUE) advanced nearly 5 percent, or $2.76, to $58.43 and US Steel Corp. (X) rose 3 percent, or $1.28, to $44.01. The S&P Steel Index climbed 4 percent.
And back on the earnings front, Transocean Inc. (RIG) rose 3 percent, or $1.76, to $59.65 after the offshore drilling contractor said second-quarter earnings soared. Shares of rivals also rose, with Nabors Industries Ltd. (NBR) up 2.8 percent, or $1.83, at $67.89, and Noble Corp. (NE) up 2 percent, or $1.45, at $69.71.
But shares of Tyco International Ltd. (TYC) dropped 9.6 percent, or $2.96, to $27.86 after the diversified manufacturer cut its outlook for the year. Banc of America lowered its rating on Tyco shares to "neutral" from "buy."
Shares of Chevron Corp. (CVX) climbed nearly 2 percent, or $1.13, to $59.56 after rival CNOOC Ltd. (CEO) dropped its bid for oil company Unocal Corp. (UCL) . Unocal shares edged up 0.3 percent, or 16 cents, to $64.53 on the NYSE.
Pipeline operator Kinder Morgan Inc. (KMI) rose nearly 7 percent, or $6.13, to $94.73, after hitting an all-time-high of $98.45 earlier. The company said Monday it would acquire Canadian pipeline company Terasen Inc. .
General Motors Corp.(GM), the world's largest automaker and a Dow component, fell nearly 1 percent, or 33 cents, to $36.53 after GM's employee discount program led to a 19.1 percent gain in July U.S. sales following a hefty 41 percent increase in June.
Meanwhile, Ford Motor Co. (F) shares rose 0.3 percent, or 3 cents, to $10.88 and DaimlerChrysler (DCX) climbed 2.8 percent, or $1.37, to $50.74 after reporting better-than-expected double-digit U.S. sales for July.
Marsh & McLennan Companies Inc. (MMC), the nation's largest insurance brokerage, said lower earnings in its insurance services and investment management divisions as well as restructuring charges reduced profits 57 percent in the second quarter, but the results were better than analysts expected. The stock fell 31 cents to $28.65.
Volume was active, with 1.53 billion shares changing hands on the NYSE, above last year's daily average of 1.46 billion,while 1.78 billion shares traded on Nasdaq, slightly below last year's daily average of 1.81 billion.
Advancers outpaced decliners by a ratio of about 2 to 1 on the NYSE, and by about 3 to 2 on Nasdaq.
The Russell 2000 index of smaller companies rose 2.79, or 0.42 percent, to 685.59.
Overseas, Japan's Nikkei stock average fell 0.06 percent. European stocks rallied, with Britain's FTSE 100 up 0.69 percent, Germany's DAX index rising 0.86 percent, and France's CAC-40 up 1.04 percent.
Reuters and the Associated Press contributed to this report.