NEW YORK ( TheStreet) -- Stocks got off to a robust start in February, with the bellwether indices closing above key psychological levels after January manufacturing data showed unexpected gains and strong earnings reports rolled in.

The Dow Jones Industrial Average jumped 148 points, or 1.2%, at 12,040, its highest level since June 2008. The S&P 500 was higher by 21 points, or 1.6%, at 1,307, and the Nasdaq was ahead by 51 points, or 1.9%, at 2,751.

Crude oil contracts traded in the U.S. retreated as investors felt concerns about the impact of unrest in Egypt on oil supplies might be overdone.

However, the crisis in the region continued to be in focus through Tuesday after Jordan's King Abdullah II dismissed his government in response to protests calling for political reform.

At the close, attention turned back to Egypt as President Mubarak made a national address. President Mubarak said that he will not seek re-election in September. Investors remain uncertain of whether that would be enough to calm protesters.

The Egyptian market remains closed but the Market Vectors Egypt ETF ( EGPT) was up 5.5% to $18.46.

Manufacturing activity in the U.S. was much stronger than anticipated in January as the Institute for Supply Management's manufacturing index rose to 60.8, from 58.5 in December. According to, economists had projected January reading of 58.4, from an initially reported level of 57 in December.

"The great news is that the manufacturing sector of our economy has taken off with a bang in 2011. The mixed blessing part of that is that it hasn't led to substantial hiring or rehiring," said Jim Russell, managing director of The Collingwood Group. He added that factories have been retooled to be more automated so that they can increase production without substantially increasing the labor force.

Russell also noted a surge in the price index component of the ISM, indicating that there's "inflation in the pipeline."

"It's a great manufacturing number but we need to view it with some caution. It appears that the measures that have been put in place are working, but the recovery is going to be a steady climb. We also have to be very cautious about how inflation takes a toll and about how we're going to reemploy America," he said.

Pfizer ( PFE) topped the Dow Tuesday on its better-than-expected results. The company topped estimates by a penny with adjusted earnings of 47 a share, and exceeded revenue expectations with sales of $17.6 billion, compared with the $16.96 billion that Wall Street had projected. The stock jumped 5.5% at $19.22.

Bank of America ( BAC), Exxon Mobil and Alcoa ( AA) were other gainers among blue-chips.

Procter & Gamble ( PG), McDonald's and 3M ( MMM) were the only Dow components that closed in the red.

Overall, eight out of every ten stocks traded on the New York Stock Exchange advanced. Over 1 billion shares changed hands on the big board while volumes topped 2.2 billion on the Nasdaq.

The Commerce Department said spending on construction fell 2.5% in December after slipping 0.2% in November. The market had been looking for a mild decline of 0.4% after initially reported growth of 0.4% in November.

Earlier, package delivery company UPS ( UPS) topped analysts' profit estimates by 3 cents with adjusted earnings of $1.08 a share and guided for its best year ever, with 2011 earnings expected to fall between $4.12 and $4.35, compared with the profit of $4.18 that analysts had been expecting. Shares rose 4.2% to $74.59.

In other earnings news, Archer Daniels Midland ( ADM) said it earned $1.14 a share during fiscal second quarter, beating the 78-cent estimate of analysts surveyed by Thomson Reuters. The company's stock surged 6.2% to $34.70.

General Motors ( GM) reported a 23% rise in sales of cars and light trucks in January. Ford ( F) saw sales climb 13% while Chrysler sales improved 23%. Shares of GM and Ford closed lower by 0.1% at $36.45 and 0.4% to $15.89 respectively.

Lexmark International ( LXK) was the biggest gainer on the S&P 500 after its fourth-quarter profits trounced estimates and it issued a bullish earnings forecast. The company expects first-quarter earnings to be $1.18 to $1.28 per share, excluding items for restructuring and acquisition costs, compared with estimates in the range of 96 cents to $1.26. Shares soared 13.2% to $39.45.

Novellus ( NVLS) and Altera ( ALTR) were other prominent gainers on the S&P 500.

Shares of truck maker Paccar ( PCAR) was the biggest S&P 500 loser on Tuesday after it delivered results in-line with estimates but warned on rising cost pressures.

In commodity markets, the March crude oil contract shed $1.42 to settle at $91.80 a barrel. The most actively traded April gold contract was up by $5.8 to settle at $1,339.60 an ounce.

The dollar weakened against a basket of currencies with the dollar index down by 0.9%. The benchmark 10-year Treasury fell 19/32, lifting the yield to 3.447%.


Hong Kong's Hang Seng added 0.2% and Japan's Nikkei rose 0.4%. London's FTSE gained 1.6% and the DAX in Frankfurt advanced 1.5%.

--Written by Melinda Peer and Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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