(Updated from 4:07 p.m. EDT)

Investors favored the old-line industrials today, after construction machinery maker

Caterpillar

(CAT) - Get Caterpillar Inc. Report

, photography company

Eastman Kodak

(EK)

and paper products producer

International Paper

(IP) - Get International Paper Company (IP) Report

beat earnings expectations.

Technology stocks moved modestly higher ahead of earnings reports from

Intel

(INTC) - Get Intel Corporation (INTC) Report

after today's close and

IBM

(IBM) - Get International Business Machines (IBM) Report

tomorrow.

The

Dow Jones Industrial Average gained 134.27 points, or 1.28%, to 10,606.39. The

Nasdaq Composite Index climbed 38.22 points, or 1.88%, to 2067.34, and the

S&P 500 added on 11.99 points, or 1%, to 1214.44.

Today and tomorrow are among the biggest earnings days of the quarter, and Wall Street wants more clues to the timing of a profits recovery. Investors have been expecting the earnings decline to turn sometime this year, but some are worried that the economy might fall into a prolonged recession. The strong earnings reports from industrials may have helped to assuage some of these concerns.

"We're still in that tug of war about the earnings and the outlooks," said Robert Harrington, co-head of block trading at UBS Warburg. "Any gains are not sustainable until we get more certainty on the earnings front."

Caterpillar reported earnings of 78 cents a share, compared with analysts' estimates of 71 cents, according to

Thomson Financial/First Call

polls. The company saw earnings slide 14% from the year-ago quarter and said the bottom line should decline 5% to 10% for the year. Caterpillar expects that revenue for 2001 will be flat with last year. The stock gained 6.3% to $53.55. Other diversified manufacturers also rose:

3M

(MMM) - Get 3M Company Report

added on 2.6% to $112.86, and

United Technologies

(UTX) - Get United Technologies Corporation Report

gained 2.1% to $76.56.

Eastman Kodak

(EK)

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climbed 2.98% to $46.03 after reporting earnings in line with analysts' expectations. Kodak said second-quarter income dropped 36.6% from the year-ago quarter to $1.12.

International Paper

(IP) - Get International Paper Company (IP) Report

posted gains after earning 13 cents a share, well above consensus expectations of 6 cents a share. But International Paper's earnings were down 80% from the year-ago quarter. IP closed ahead anyway, adding on 2% to $39.

General Motors

(GM) - Get General Motors Company (GM) Report

said earnings, before items, fell to $1.26 a share from $2.93 in the year-ago quarter. Analysts were expecting $1.14. GM lost 1.6% to $65.99.

Johnson & Johnson

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reported earnings of 51 cents a share, excluding items, but the bottom line missed forecasts. On average, analysts were expecting 53 cents a share. The stock closed up, though, by 2.2% to $54.91.

Meanwhile, tech obsessed investors are worried about the post-close earnings report from chip giant Intel and tomorrow's announcement from IBM. Intel said after yesterday's closing bell that it was cutting prices by as much as 37% on some of its microprocessors, and Wall Street fears that the company will have to lower its guidance for the rest of the year. Intel's price cuts come in the midst of a price war with its rivals, in particular

AMD

(AMD) - Get Advanced Micro Devices, Inc. Report

Financials were higher today, despite weak earnings reports from

Wells Fargo

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and

Merrill Lynch

(MER)

. Wells Fargo, the No. 4 banking company in the U.S., posted a second-quarter loss of 5 cents a share. Analysts were forecasting earnings of a penny a share. The stock closed up by 3.2% to $47.50. Merrill beat estimates by 2 cents, with income of 56 cents a share, but its earnings dropped 41% from the year-ago quarter. The brokerage firm's shares lost 0.9% to $52.70. The

Philadelphia Stock Exchange/KBW Index

closed up by 2.5%.

In addition to IBM,

J.P. Morgan Chase

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,

Philip Morris

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and

Coca-Cola

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are scheduled to report earnings Wednesday.

The market was little moved by the morning's

industrial production

data. The data showed industrial production declined for the ninth-straight month in June, falling 0.7% for the month, compared with a consensus forecast for a 0.5% drop. May's data was revised up, however, to a 0.5% decline from initial estimates of a 0.8% drop. Capacity utilization fell to 77% for the month, its lowest rate since August 1983, though economists had been expecting an even steeper drop, to 76.6%. Capacity utilization was a revised 77.6% in May.

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