Stocks Rise Two Days in Row

Stocks finish higher on strong housing data and robust earnings. Gregg Greenberg has The Real Story.
By Melinda Peer ,

NEW YORK (

TheStreet

) -- Stocks closed significantly higher for the second consecutive day, helped by promising housing data and better-than-expected earnings from companies like

UPS

(UPS) - Get Report

,

D.R. Horton

(DHI) - Get Report

and

Emerson Electric

(EMR) - Get Report

.

U.S. stocks had their best two-day performance in three months as the

Dow Jones Industrial Average

gained 111 points, or 1.1%, to 10,297. The

S&P 500

was ahead by 14 points, or 1.3%, at 1103 and the

Nasdaq

was up by 19 points, or 0.9%, at 2190.

>>Fast-Growth Stocks to Buy in Shaky Market

After the closing bell,

MetLife

(MET) - Get Report

reported earnings that were a penny higher than expected, as did

Quest Software

(QSFT)

.

News Corp.

(NWSA) - Get Report

also beat estimates with adjusted earnings of 25 cents a share.

Stocks held gains for nearly the entire trading session, as Economic Recovery Advisory Board chairman Paul Volcker and Treasury Secretary Timothy Geithner testified on Capitol Hill. Volcker urged

curbs on big banks before the Senate Banking Committee and Geithner discussed President Obama's proposed $3.8 trillion budget for fiscal 2011.

"Everyone is waiting to see what's going to come from the government in terms of reform for the banking industry," said Matthew Smith, president and chief investment officer at Smith Affiliated Capital, who doesn't expect Washington to resolve anything ahead of the upcoming elections, which he sees as the reason why so many Republicans are coming out against Volcker's banking restrictions.

"Once you have gridlock -- this going back and forth between sides -- the market tends to do better. I think that's what you're seeing today," Smith said.

Conglomerates and industrials led markets higher on a spate of better-than-expected earnings.

Cummins

(CMI) - Get Report

, Emerson Electric and

Lexmark

(LXK)

closed higher by 8.8%, 10.1% and 12%, respectively.

Shares of

Bank of America

(BAC) - Get Report

,

General Electric

(GE) - Get Report

and

Alcoa

(AA) - Get Report

were the Dow's top performers.

A weaker U.S. dollar also contributed to higher stock and commodity prices. Oil, which reversed a week of losses on Monday, had a particularly strong day with the March crude contract settling $2.80, or 3.8% higher at $77.23 a barrel.

"Strong manufacturing data from the U.S. helped lift sentiment across markets and served as a catalyst to reverse a period of sharp losses," said Barclays Capital analyst Costanza Jacazio. "The recent flow of data remains consistent with our view of continued gradual improvement in global oil demand trends, with the latest data releases -- U.K. and Japan -- both showing relatively strong demand indications. Meanwhile, on the supply side, after a long period of steady OPEC output increases, first indications for January suggest some stabilization in production trends."

After the close of trading, American Petroleum Institute reported an increase of 4.7 million barrels in the week ended Jan. 29. Analysts polled by Platts had expected a crude-oil drawdown of 1 million barrels.

Gold

added $13, or 1.2%, to settle the session at $1,118 an ounce as the dollar weakened against a basket of currencies. The dollar index was lower by nearly 0.2%.

Earlier, stocks were boosted by better-than-expected earnings from

UPS, whose earnings are closely watched for a read on business activity. The company also increased its earnings guidance. Its shares gained 23 cents, or 0.4%, to close at $58.62.

Shares of

Ford added 2.4% during the session after the carmaker said higher January sales across all brands and product categories resulted in a 25% increase year over year.

Toyota

(TM) - Get Report

, which was recently hit by a massive safety recall, reported an 8.7% sales decline on an adjusted basis.

GM

, meanwhile, reported a 14% increase and

Chrysler

posted an 8% dip.

Ford shares saw heavy volume on the

New York Stock Exchange

, which had a listed volume of 4.7 billion. Only shares of

Citigroup

(C) - Get Report

and

Bank of America

(BAC) - Get Report

were seeing higher volume.

In macroeconomic news, the National Association of Realtors said its pending home sales index rose 1% in December, putting it 10.9% higher year over year. Economists had been expecting an increase of 1.1%.

Homebuilder

D.R. Horton reported an unexpected profit, pushing the stock up 10.9%, to close at $13.21. The news lifted shares across the sector, with the

SPDR S&P Homebuilders

(XHB) - Get Report

ETF finishing ahead by 4.6% at $15.85.

Dow Chemical

(DOW) - Get Report

and agricultural company

Archer Daniels Midland

(ADM) - Get Report

also reported better-than-expected earnings. Dow's stock closed 3.7% lower, and ADM shares finished up by 4.9%, at $31.63.

Europe's largest oil company,

BP

(BP) - Get Report

, swung to a profit in the fourth quarter but missed Wall Street estimates on refining business weakness. The stock shed $1.77, or 3.1%, to close at $55.46.

Bank of New York Mellon

(BK) - Get Report

is buying

PNC's

Global Investment Servicing subsidiary for $2.1 billion.

Citigroup

(C) - Get Report

is looking to expand in Japan, with plans to open four retail branches there in 2010.

The benchmark 10-year Treasury note strengthened 4/32, diluting the yield to 3.641%.

-- Written by Melinda Peer in New York

.

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