Earnings propel Dow to biggest jump in a month
NEW YORK -- Inflation is low, earnings are high, investors are happy.
Stocks shot higher Tuesday, giving the market its biggest gain in a month. Results at Mattel, Goldman Sachs, and Johnson & Johnson were all above expectations.
It was the second day of broad gains following a down week last week. Investors had been worried headed into the third-quarter earnings season that corporate profits wouldn't be good enough to justify the run-up in stocks in recent months. While earnings haven't been out-of-the-park great, they haven't been as bad as some had feared.
Also Tuesday, the Labor Department said consumer prices rose just 0.1 percent last month, not counting food and energy costs. And gasoline prices have come down since then. Low inflation leaves consumers with more money to spend, and leaves the Federal Reserve free to continue its efforts to boost the economy.
In addition, an index of homebuilder sentiment came in at its highest level since 2006, suggesting that the construction industry is making a comeback.
"The picture of the economy is one that's still proving to be resilient to a lot of the problems that investors are worried about," said Gary Thayer, chief macro strategist for Wells Fargo Advisors.
The Dow Jones industrial average rose 127.55 points to close at 13,551.78, its biggest gain since Sept. 13.
The Standard & Poor's 500 index rose 14.79 points to 1,454.92, and the Nasdaq composite rose 36.99 to 3,101.17.
The gains were broad, with nine out of 10 industry groups in the S&P 500 index rising. Telecom stocks had a tiny decline. Materials stocks rose 2.4 percent.