U.S. Stocks Find a Rally Route - TheStreet

Updated from 11:09 a.m. EDT

Stocks on Wall Street were showing some life Tuesday as traders began to process a stack of fresh earnings statements, watched oil prices continue to decline and greeted with optimism the sale of mortgage-backed bonds by

Merrill Lynch




Dow Jones Industrial Average

was climbing 163 points to 11,294, and the

S&P 500

was adding 17 points to 1251. The


tacked on 44 points to 2308.

Last time out, the three major indices sold off steadily throughout the day as a series of mediocre earnings statements failed to counteract continuing fears about the health of the financial sector. The Dow and the Nasdaq both lost at least 2%, and the S&P dropped 1.9%.

Helping the rebound was another drop in crude oil, which was continuing its recent slump. Lately, futures were dropping $3.03 to $121.70 a barrel after earlier reaching $121.10, its lowest level since May. Gold was losing $10.30 to $927.50.

Following the end of previous session, Merrill Lynch announced that it would be

selling to an affiliate

$30.6 billion in collateralized-debt obligations for $6.7 billion. The company, which has in recent quarters been troubled by the tough-to-value assets, also said it will raise $8.5 billion in capital through a stock offering and take a $4.4 billion pretax charge-off in the third quarter.

Jeff Saut, managing director at Raymond James, said that Merrill's sale of those securities at a discount wasn't a surprise. "What was a surprise was that they got as much as 22 cents

on the dollar for the portfolio. Nobody knows how to value it." He predicted more sales of esoteric securities by other financial firm as the end to the fiscal and calendar year approaches.

On the other hand, Saut said he's observed that the recent pullback in banking stocks has been on lower volume, indicating that equity prices in the sector may have put in a near-term trading low.

Meanwhile, biotech company


(AMGN) - Get Report


earnings that beat expectations

, as did agricultural chemicals concern


(MOS) - Get Report


When the new trading day arrived, investors received financial results from another series of companies, including steel producer

U.S. Steel

(X) - Get Report

, which announced that its second-quarter profit more than doubled thanks to its ability to pass increasing raw-material costs on to clients.

Also benefiting from the steel boom was coal company

Alpha Natural Resources


. Alpha Natural saw second-quarter earnings rise to record levels. Management attributed the success to persistent demand for metallurgic coal among steel producers.

Energy company


(BP) - Get Report

announced a 28% year-over-year increase in profit thanks to rising oil prices.

Among technology names, struggling telecommunications firm



reported a quarterly loss and announced the


of CEO Patricia Russo and Chairman Serge Tchuruk. Shares were rising on news of the shakeup.

Electronics manufacturer


(SNE) - Get Report

also had results, saying its profit was cut in half from a year ago and lowering its 2008 forecast.

After a long regulatory wait,



XM Satellite Radio

completed their merger Tuesday

. Though investors had long been awaiting the deal's close, word that the new company would raise capital sent the shares lower by roughly 20%.

Fruit-and-vegetables purveyor

Fresh Del Monte Produce

(FDP) - Get Report

reported a 34% decline in second-quarter profit thanks to weather-related damage to its products.

Elsewhere, defense firm

Northrop Grumman

(NOC) - Get Report

said profits increased 8% year over year. Athletic underwear company

Under Armour

(UA) - Get Report

saw profits decline, as did disposal business

Waste Management



On a day that was rather light in terms of economic data, the S&P Case-Shiller 20-city housing index showed home prices falling 15.8% year over year for May, the largest decline since the index's debut in 2000. However, rising consumer confidence was a bright spot. The Conference Board announced that its July consumer confidence number came in at 51.9, ahead of the consensus estimate of 50 and up from 51 in June.

Long-dated U.S. bonds were falling. The 10-year Treasury note was off 20/32 to yield 4.08%, and the 30-year was down 1-2/32, yielding 4.67%. The dollar was gaining on the euro, the yen and the pound.

Across the seas, markets were mixed. In Europe, Frankfurt's DAX and London's FTSE were getting stronger, while in Asia Japan's Nikkei and Hong Kong's Hang Seng were showing weakness.

For a quick take on more of today's earnings, please click here.