Stocks Take the High Road

Oil gains fade, and investors focus on solid earnings to deliver consecutive winning sessions.
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Updated from 4:02 p.m. EST

Stocks posted their first back-to-back winning sessions of the new year Tuesday as investors celebrated solid earnings in the banking and pharmaceutical sectors and a reversal in oil prices.

The

Dow Jones Industrial Average

rose 70.79 points, or 0.67%, to 10,628.79; the

S&P 500

gained 11.46 points, or 0.97%, to 1195.98; and the

Nasdaq

rose 18.13 points, or 0.87%, to 2106.04. The tech index closed above 2100 for the first time since Jan. 4. The performance was all the more impressive because all the major indices posted their best single-day point gains of the year, despite opening lower.

Volume on the

NYSE

was 1.60 billion shares, with advancers beating decliners by a ratio of 2 to 1. Volume on the Nasdaq was 1.98 billion shares, with advancers outpacing decliners by about the same ratio.

"This week is the pivotal week where we can shift focus to earnings," said Art Hogan, chief market analyst with Jefferies. "If the price of oil can stay out of the equation and the focus stays on earnings, we'll be better off. Across the board we're seeing better-than-expected numbers. There's more good news than bad news out there."

For the year, the major indices still are showing significant losses. The Dow has lost 1.43%, the S&P 500 is down 1.63% and the Nasdaq has dropped 3.60%.

In other markets, the 10-year Treasury note was up 5/32 in price to yield 4.19%, while the dollar was higher against the euro and flat with the yen.

Oil eased from earlier levels above $49 a barrel. The February crude contract closed unchanged at $48.38 a barrel. A cold snap in the East was the latest catalyst driving oil prices higher earlier in the session. Oil surged almost 7% last week, raising concerns about a return to $50 a barrel and an adverse effect on spending patterns.

"I think we're reaching the midpoint of the heating oil season," said Robert Pavlik, a portfolio manager at Oaktree Asset Management. "We're nearing the top of the cycle of demand, and that might be driving oil. There's always talk about what OPEC might say and abide by."

In economic news, the New York Federal Reserve Bank said its Empire State manufacturing index fell to 20.1 in January from 27.1 in December, lower than the expected reading of 25.3. The employment index also fell, down to 12.7 in January from 15.7 in December.

Earnings season began in earnest Tuesday, kicked off by

Bank of America

(BAC) - Get Report

, which said fourth-quarter earnings rose 41% to $3.85 billion, or 94 cents a share. The profit included a restructuring charge of 4 cents a share. Revenue rose 42% to $13.71 billion. Both numbers were slightly above analysts' forecasts. Bank of America shares rose 84 cents, or 1.9%, to $45.73.

Fifth Third's

(FITB) - Get Report

fourth-quarter earnings fell 63% from a year ago to $176 million, or 31 cents a share. The decline was due to a securities writedown and was slightly smaller than analysts feared. Shares gained $2.66, or 6%, to $47.17.

Consumer products giant

3M

(MMM) - Get Report

reported a fourth-quarter profit of $720 million, or 91 cents a share, in the fourth quarter, compared with $619 million, or 77 cents a share, last year. The result was in line with estimates. 3M fell $1.95, or 2.3%, to $82.02.

Ameritrade

(AMTD) - Get Report

said first-quarter earnings rose 29% from a year ago to $92.6 million, or 22 cents a share, 2 cents a share better than estimates. The online broker said it expects to earn 77 cents to 90 cents a share for the current fiscal year, up from its previous estimate of 72 cents to 89 cents a share. Shares rose 42 cents, or 3.4%, to $12.85.

Abbott Labs

(ABT) - Get Report

reported fourth-quarter earnings of 67 cents a share, which met the Thomson First Call consensus. The company reaffirmed its 2005 earnings outlook, forecasting $2.47 to $2.53 a share, excluding items, in line with the consensus estimate of $2.50. Shares lost 21 cents, or 0.4%, to $46.04.

Several major technology companies also reported results after the bell Tuesday, with

IBM

(IBM) - Get Report

,

Motorola

(MOT)

and

Yahoo!

(YHOO)

all posting earnings that beat analysts' estimates.

Krispy Kreme

(KKD)

said CEO Scott Livengood retired, replaced by the head of a New York turnaround firm hired as the company's financial adviser. The company is also expecting a significant decline in fourth-quarter sales. Krispy Kreme was higher by 89 cents, or 10.2%, to $9.61.

JDS Uniphase

(JDSU)

said it now expects a second-quarter loss of 2 cents a share, vs. its previous forecast for a loss of 1 cent a share. The company cited a decline in revenue from one of its major customers as well as high legal expenses. Shares were unchanged at $2.78.

Overseas markets were lower, with London's FTSE 100 down 0.5% to 4823 and Germany's Xetra DAX up 0.1% to 4250. In Asia, Japan's Nikkei fell 0.6% overnight to 11,423, while Hong Kong's Hang Seng dipped 0.1% to 13,604.