Stocks posted impressive gains on Tuesday, following a trio of good news: generally upbeat quarterly earnings from blue-chip U.S. companies, a better-than-expected reading on U.S. housing starts in June and optimism that Washington might be approaching a deal of extending the U.S. debt ceiling.
The Dow Jones industrial average closed at 12,587.42, up 202.26 points or 1.6 per cent. The broader S&P 500 closed at 1326.73, up 21.29 points or 1.6 per cent. In Canada, the S&P/TSX composite index closed at 13,332.92, up 78.78 points or 0.6 per cent.
The gains began early in the day, after investors began digesting the latest round of quarterly earnings. However, U.S. President Barack Obama's endorsement of a Senate plan to cut the deficit - seen as a precursor to an agreement among politicians to raise the U.S. debt ceiling - gave stocks an extra push.
Technology stocks showed some of the biggest gains, a day after International Business Machines Corp. reported better-than-expected earnings and raised its outlook for the full year. IBM shares rose 5.7 per cent and lifted others as well. Microsoft Corp. rose 3.6 per cent and Intel Corp. rose 3.5 per cent.
Apple Inc. rose 0.8 per cent ahead of its quarterly earnings, released after markets closed. The iPhone, iPad and iPod maker reported earnings of $7.3-billion (U.S.) in its fiscal third quarter, beating expectations among analysts. Revenue hit $28.6-billion, also beating expectations, thanks in part to the sale of 9.25 million iPads during the quarter. However, Apple forecast earnings in the fourth quarter that were below analysts' forecasts.
Meanwhile, Coca-Cola Co. rose 3.3 per cent after it reported its second quarter results and Harley-Davidson Inc. surged 8.9 per cent.
However, key names in the U.S. financial sector were left out of the rally. Goldman Sachs Group Inc. fell 0.7 per cent after missing earnings expectations. Bank of America Corp. fell 1.5 per cent after its big loss during the quarter raised concerns among some investors that the bank will have to raise more capital.
Rising crude oil prices helped drive Canadian energy stocks higher. Suncor Energy Inc. rose 2.2 per cent and Canadian Natural Resources Ltd. rose 2.4 per cent. However, gold producers took a step back after the price of gold stalled above $1,600. Barrick Gold Corp. fell 1.7 per cent.