NEW YORK ( TheStreet) -- Stocks enjoyed a broad rally on Tuesday as a strong global growth forecast from the International Monetary Fund, a pair of successful Spanish bond auctions and strong corporate results boosted investor sentiment. The Dow Jones Industrial Average gained 194 points, or 1.5%, to finish at 13,115, just below a session-high of 13,131. All 30 components of the blue-chip index finished in the green, with Walt Disney ( DIS), Kraft ( KFT) and General Electric ( GE) posting the biggest percentage gains. The S&P 500 rose 21 points, or 1.5% to close at 1391, making a solid break above its closely watched 50-day moving average of 1370. The Nasdaq was the biggest winner, jumping 54 points, or nearly 2%, to settle at 3043 as investors anticipated earnings from tech heavyweights including IBM ( IBM), Intel ( INTC), Yahoo! ( YHOO) after the closing bell. Apple ( AAPL) broke its five-day losing streak, rising 5.1% to $609.70 on volume of 36.3 million, well ahead of the trailing three-month daily average churn of 21.9 million. The initial reaction to the late round of earnings from tech was mixed though. Shares of Yahoo! were rising 2% in after-market trading hours after gaining 1.45% during the session, after the company said profits rose 38% to 23 cents per share, beating estimates for 17 cents. Investors will likely pay more attention to any update CEO Scott Thompson provides on the conference call about recent restructuring efforts. Thompson unveiled plans earlier this month to lay off 2,000 employees, or 14% of the work force, and realigned Yahoo! into three divisions. Shares of IBM were losing 2% in after-market trading, even though it beat estimates on the bottom line and raised its guidance to 15 cents per share, above consensus. Investors were not impressed with Intel's results either, although the chipmaker also beat estimates with an earnings per share of 56 cents on revenues of $12.9 billion.
Earlier on Tuesday, the International Monetary Fund hiked its global growth forecast to 3.5% from 3.3% for 2012 and boosted its U.S. growth outlook to 2.1% from 1.8%. The IMF said that "some optimism has returned" to the world economy but also cautioned that the optimism should be "tempered." The IMF said that growth in the United Kingdom should speed up as well, by 0.8% rather than the previously forecast 0.6%.
The IMF's outlook helped offset lackluster data on the domestic front. The Department of Commerce reported that March housing starts fell 5.8% in March to a 654,000 annual rate, which was lighter than expectations for a 705,000 rate, according to a survey by Thomson Reuters. This reading was the lowest pace since October. Building permits, however, jumped 4.5% in March to a 747,000 rate, greater than the expected 710,000 rate. Industrial production was unchanged in March, falling short of the consensus estimate for a 0.3% rise. Capacity utilization last month was basically unchanged as well, falling to 78.6% from 78.7% and matching expectations. Concerns about Spain's borrowing costs also abated after the country was able to sell €3.2 billion in short-term bonds, which surpassed the maximum target of €3 billion announced before the auction. Still, short-term borrowing costs rose during the sale, with the average yield on 12-month bills at 2.623%, up from 1.418% last month and the yield on 18-month bills popping to 3.11% from 1.711% last month. Spain will hold another round of bond auctions on Thursday. The Spanish ten-year yield stayed elevated above 6%. "In terms of Europe, demand for Spanish debt was strong even though yields remain stubbornly at the high end of the range," says Peter Cardillo, chief market economist at Rockwell Global Capital. "Still, demand was there." The auction results came as the ZEW Center for European Economic Research in Mannheim said its index of German investor and analyst expectations increased to a far better-than-expected 23.4 from 22.3 in March -- the fifth consecutive gain and the highest reading since June 2010, despite deep problems in the peripheral nations. London's FTSE gained 1.78% and Germany's DAX rose 2.6%. "I think basically the fear factor in Europe is being overblown and I think that as the flow of earnings continue to hit the Street, the market is going to reflect on the earnings," says Cardillo. Todd Salamone, director of research at Schaeffer's Investment Research, attributes some of today's buying interest to options activity.
"You've got this expiration week and you've got a lot of put open interest that's about to expire," says Salamone. " In the absence of any negative news, you can get an unwind related to the expirations that creates a short covering rally into the Friday expirations." "Once you get through the first and second week of earnings season and establish a better-than-expected trend, which is what the market is probably rallying on, earnings becomes less of a factor," adds Cardillo. "But it's still important to the market's fundamentals. I think the earnings season and the prospect of moderate economic growth is setting the stage for the fear factor of sell in May." A wave of strong early earnings reports aided sentiment. Coca-Cola ( KO), the beverage giant, reported first-quarter net income of $2.05 billion, or 89 cents a share, up from year-earlier earnings of $1.9 billion, or 82 cents. The company's first-quarter net operating revenue was $11.1 billion. Coca-Cola's volume increased 5% in the first quarter with 20% volume growth in India and 9% growth in China. Coca-Cola was expected by analysts Tuesday to post first-quarter profit of 88 cents a share on revenue of $10.82 billion. Shares of Coca-Cola rose 2.1% to close at $73.95. Consumer goods and drug giant Johnson & Johnson topped Wall Street's view, posting first-quarter adjusted earnings of $3.8 billion, or $1.37 a share. The performance topped year-earlier earnings of $3.7 billion, or $1.36 a share. Analysts, on average, were calling for earnings of $1.35 a share. Global consumer sales at J&J totaled $3.6 billion, down 2.4% from last year. U.S. sales fell 2.2% and international sales declined 2.5%. Shares of J&J added 0.4% at $64.22. Goldman Sachs ( GS) posted better-than-expected first-quarter earnings of $2.1 billion, or $3.92 a share, beating the $3.55 a share expected by analysts polled by Thomson Reuters, but falling from earnings of $4.38 a share last year. Goldman's earnings narrowly beat estimates driven by aggressive cost-cutting and strong investment banking and trading revenues, though revenue fell throughout most of the firm's businesses. Goldman also said it plans to increase its quarterly dividend to 46 cents per share from 35 cents. Shares dipped 0.7% to close at $116.86.
Shares of Citigroup ( C) rose 3.2% after long-time bear Meredith Whitney raised her rating on the stock to hold from underperform, citing improved operating metrics. Several other analysts also raised their estimates on the stock. May oil futures rose $1.27 to settle at $104.20 a barrel in late morning trading, while June gold futures reversed earlier losses to rise $1.40 to settle at $1,651.10 an ounce. The U.S. dollar index was trading sideways, while the benchmark 10-year Treasury was falling 5/32, boosting the yield to 2%. Earlier in Asia, Japan's Nikkei Average finished flat and Hong Kong's Hang Seng index had closed down 0.2% as investors got jittery about upcoming Spanish bond auctions. -- Written by Andrea Tse and Shanthi Bharatwaj in New York.