NEW YORK – Wall Street rebounded Tuesday, rising moderately as crude oil surged more than $2 a barrel and triggered a rally among energy producers. Investors regained their optimism about corporate profits after a series of positive earnings reports.
Energy prices spiked after the Energy Secretary Samuel Bodman said the U.S. will double the size of the nation's Strategic Petroleum Reserve. Prices were already rising as a cold snap in the northeast United States was seen increasing demand for heating fuels in the region.
Exxon Mobil Corp. (XOM) led blue chips and was among the Dow Jones industrials' biggest gainers, while fellow refiners ConocoPhillips (COP) and Chevron Corp. also surged during the session. The advance in oil stocks helped the Dow recover from a steep decline Monday, its biggest drop in two months and a reaction to investor uneasiness about earnings.
The markets also got a lift Tuesday from robust earnings reports from United Technologies Corp. (UTX) and Texas Instruments Inc. This helped offset a warning from telecommunications equipment maker Alcatel-Lucent that it would not post a profit during the fourth quarter because of a steep decline in sales.
"Earnings are not coming in all that bad," said Brian Gendreau, an investment strategist with ING Investment Management. "There is an absence of any real bad news, leading indicators are up, and companies are not falling off the table. That's consistent with the modest rise in the Dow."
According to preliminary calculations, the Dow rose 56.64, or 0.45 percent, to 12,533.80 after dropping 88.37 on Monday.
Broader stock indicators also advanced. The Standard & Poor's 500 index was up 5.04, or 0.35 percent, at 1,427.99, and the Nasdaq composite index added 0.34, or 0.01 percent, to 2,431.41.
Bond prices fell, with the yield on the benchmark 10-year Treasury note rising to 4.81 percent from 4.76 percent late Monday.
In economic news, a Richmond Fed Survey showed a slip in its manufacturing index this month. Meanwhile, the Conference Board said U.S. economic activity is set to increase slightly in the coming months.
The dollar was mixed against other major currencies, while gold prices spiked. A barrel of light, sweet crude rose $2.47, or 4.7 percent, to settle at $55.04 on the New York Mercantile Exchange.
As has been typical in previous sessions, oil companies got a boost on the rebound in crude prices. The refiners stand to benefit if the government expands its reserves. Exxon Mobil rose $1.59, or 2.2 percent, to $74.49; ConocoPhillips was up $1.59, or 2.9 percent, at $64.97; and Chevron increased $1.34 to $72.88.
This helped investors shake off Alcatel-Lucent's (ALU) statement that it post a loss for the first full quarter since combining in last year's $11.6 billion deal between France's Alcatel and Lucent of the U.S. The company blamed integration costs and weaker sales because of consolidation among its customers.
Alcatel-Lucent fell $1.04, or 7.3 percent, to $13.15. Rival Tellabs Inc. fell 7 cents to $9.95 after despite reporting a plunge in sales caused profit to fall 68 percent during the latest quarter.
However, technology stocks were up overall after chip maker Texas Instruments reported a robust quarterly profit and was upgraded by several Wall Street firms. Shares rose $1.01, or 3.5 percent, to $29.60.
United Technologies, which makes everything from air conditioners to aircraft engines, reported fourth-quarter profit rose 38 percent, which sent shares up $2.05, or 3.2 percent, to $66.14.
Bank of America (BAC) fell 33 cents to $53.32 despite the nation's biggest retail bank saying growth in its loan business and its acquisition of credit-card issuer MBNA Corp. helped boost profit during the latest quarter. Rival Wachovia Corp. shares rose 38 cents to $56.65 after reporting better-than-expected results.
DuPont posted higher quarterly earnings that met Wall Street forecasts, but investors were concerned about how the impact of higher raw materials costs will impact the chemical maker. Its stock fell 43 cents to $49.67.
The Russell 2000 index of smaller gained 7.42, or 0.95 percent, to 785.38.
Overseas, Japan's Nikkei stock average closed down 0.08 percent. At the close, Britain's FTSE 100 was up 0.15 percent, Germany's DAX index dropped 0.13 percent, and France's CAC-40 shed 0.08 percent.