Wall Street Rebounds: Dow Jones, Nasdaq, Standard & Poor's Rise In Face Of Debt Deal

NEW YORK (Reuters) - Wall Street rebounded on Tuesday, bolstered by strong corporate results and renewed hope for an agreement in Washington that would avert a default on U.S. debt.

Strong quarterly numbers from technology bellwether International Business Machines Corp and beverage giant Coca-Cola boosted technology and consumer shares in the first heavy week of second-quarter results. IBM gained nearly 5 percent, leading the Dow's gainers.

Markets surged after President Obama suggested progress was being made toward a deficit reduction deal. The White House and Congress need to sign a deal that includes an increase in the federal debt ceiling by August 2 or the United States could default on its debt.

"Stocks are starting to bounce at least for the time being, with people wagering that there will be a resolution on the debt ceiling," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

The S&P information technology sector <.GSPT> gained 2.5 percent, making it the top gainer among S&P sectors. Shares of Apple hit a 52-week high ahead of its report due after the closing bell.

All 10 S&P 500 sectors rose on Tuesday, even shares of financials, which were hit by declines in Goldman Sachs Group Inc and Bank of America following their results. After advancing in the morning, Bank of America shares fell 2 percent to $9.53, while Goldman declined 1.8 percent to $126.97.

Wells Fargo shares jumped 5.5 percent, the biggest gain on the S&P financials index, after the bank said its profit rose 30 percent.

"We've kicked off with strong earnings from IBM, which showed broad strength across different segments and geographies," said Ed Crotty, chief investment officer at Davidson Investment Advisors in Great Falls, Montana. "As we get into earnings season, that tends to take center stage."

The Dow Jones industrial average <.DJI> was up 210.10 points, or 1.70 percent, at 12,595.26. The Standard & Poor's 500 Index <.SPX> was up 21.38 points, or 1.64 percent, at 1,326.82. The Nasdaq Composite Index <.IXIC> was up 57.84 points, or 2.09 percent, at 2,822.95.

Housing starts hit a six-month high in June, and permits for future construction rose. Homebuilder D.R. Horton Inc climbed 5.1 percent to $11.87 and the PHLX Housing Index <.HGX> rose 2.3 percent.

Goldman's second-quarter net income fell short of lowered expectations as fixed income trading revenue dropped sharply. Bank of America recorded a second-quarter net loss of $8.8 billion.

Coca-Cola Co posted slightly higher-than-expected profit. Johnson & Johnson's earnings topped estimates on a turnaround in its prescription medicines and stabilizing sales of over-the-counter medicines.

Coke rose 3.7 percent to $69.63, while J&J was 1.3 percent lower at $66.25. Johnson & Johnson's higher-than-earnings were mainly attributed to lower taxes and the weak dollar.

(Reporting by Ashley Lau; Editing by Kenneth Barry)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[baldguy]

07:45 PM on 07/20/2011

I'd really like to wipe the smile off that guy's face.....

[El Chingaso]

02:07 PM on 07/20/2011

Illusions...that's all it is. The market reacts to the most bone-headed news...that means absolutely nothing.

[jcaunter]

10:00 AM on 07/20/2011

Seeing these enemies of the people exalting at the prospect of a debt ceiling lift passing has made me pray all the harder that Obama and his Wall Street golfing buddies get taken to the mat over the ceiling.

[jerdog365]

09:25 AM on 07/20/2011

Coinsidence? I don't think so, this dog and pony show has been going on long enough. THEY have decided it's time to end all this BS and just do what THEY want to anyways.....RAISE THE DEBT LIMIT. It doesn't matter how it effects the average Joe, they sit in their guilded rooms, laugh at the ignorant public, and make policy that is destroying this nation. WHY? Two words, IGNORANCE and APATHY on behalf of the American public. Keep watching that boob tube, it tells what to do and believe. If I had one piece of advise, it would be, TURN OFF YOUR TV, you have no idea how it dictates your life, and turns you into a brain dead zombie.

[HarmonTerr]

09:05 AM on 07/20/2011

The market is the most reliable mechanism of investment return, historically, than real estate, bonds, CD's, savings accounts, collectors' items, gold, precious stones, or hiding money undr your mattress. If a plan comes out of Congress that is balanced, fair, has real cuts in spending, is revenue neutral, and reduces fraud & waste, wath the market take off. Right now is a great time to BUY Blue Chips folks.
Think "Dollar Cost Averaging" and start investing now. If you have to first start your Debt Snowball then what are you waiting for? (Financial Peace University)

[HarmonTerr]

08:45 AM on 07/20/2011

The market is hinting at its capacity to rebound if only Mr. Obama comes around. There are billions on the side right now waiting to be infused. Don't screw it up...

[Julie99]

08:26 AM on 07/20/2011

Smoke and mirrors. Poor are getting poorer and rich get richer buying politicians in their back pocket. 1929 was a good year to fall from the sky, sometimes I pray this will happen again.

[HarmonTerr]

08:42 AM on 07/20/2011

How much more poor would the poor be if there were no rich?

[Djay0252]

07:58 AM on 07/20/2011

If the Republicans get their way that will not be happening for much longer

[HarmonTerr]

08:46 AM on 07/20/2011

Try Economics 101.

[Razorsharp1234]

07:52 AM on 07/20/2011

Why am I not surprised, maybe Wall STreet needs to take a few days off, I and live like us. WHo is Wall Street to play with our lives and makes decisions with our money. Shame on you. Replace each and everyone with a new fresh face (uncorrupted of course)

[HarmonTerr]

08:48 AM on 07/20/2011

Tell me you have no retirement instruments. If not then you have a bleak future.

[Razorsharp1234]

07:27 AM on 07/21/2011

I have plenty of retirement resources, but they are for ME and my family, not for the darn Wall STreet speculators who think they can use my money to fill their pockets and at the end of the day say "sorry, we miscalculated" Heck no, I worked to darn hard to earn that money. Don't worry about me, I am fine in my old days.

[automan 57]

07:52 AM on 07/20/2011

Boy I will sleep better tonite knowing wall st. is doimg well !!! I know this will make the sixteen million plus people in america who don't have a job all warm and fuzzy !!! Hey the government is going to steal grandma's S.S. Can't wait to see the nightly news another pharmacy robbed by masked edlerly person in a hover round !!!

[HarmonTerr]

08:49 AM on 07/20/2011

How's your investment portfolio, 401K or IRA this morning? Don't bite the hand that feeds you.

[jerdog365]

09:27 AM on 07/20/2011

Until that hand takes all the food away.

[HarmonTerr]

09:39 AM on 07/20/2011

You are either paranoid, broke, or have absolutely no idea how the market works. Perhaps you are a combination of all three but the bottom line is if you want to eat, feed yourself.

[rwa5279]

07:31 AM on 07/20/2011

Isn't this wonderful big business has record profits and the stock market is showing signs of movement while people struggle with higher prices at the pump which transcends into higher prices for everything. Our dollars are worth less and people don't earn more to make up for it. People who call themselves Republicans think that party cares about their ideals of being free to do whatever they want but that party actually caters to the special interests of big business who could care less about the average citizen. I challenge big business to take some of the record profits and use it to hire people so this economy can strengthen but so far I believe greed reigns over need to improve the overall health of society. In the 1960's business was loyal to the people and in turn the people were loyal to business. Since business has sent the message after 40 years of your loyalty, "YOU'RE FIRED," and since our country has been losing the American Dream for the United States Citizen. If people weren't so complacent with their computers, tv and games they would revolt but I digress.

[HarmonTerr]

08:51 AM on 07/20/2011

Remove the federal policy restrictions Obama has placed on business resulting in a stranglehold on American commrce and industry and watch the Eagle soar!

[knute9]

07:17 AM on 07/20/2011

Wall Street is up regarding the hopes debt deal? Either action Washington takes will be bad for the economy. Why? If the debt deal doesn't go through then interest rates will balloon. If they compromise and reach a deal, expect some form of tax increase (not necessarily income), coupled with spending cuts (less money flowing into the economy). My main concern is europe, which there are several countries who are teetering on the debt, and are playing a game of robbing Peter to pay Paul. The Chinese real estate boom is nearing it end, it may not bust because of debt but it's certainly going to cool significantly because of demand. Also, just look at how much the DJIA in the last 2 years, it's time for a correction.

[HarmonTerr]

08:52 AM on 07/20/2011

Do you have any idea how much investment capital is waiting on the sides? Waiting for what? Guess.

[Rock Fossil]

06:14 AM on 07/20/2011

If Wall street is doing great, shouldn't Obama be a hero to the Rich? How many of you out there make your living from Wall street anyway? It seems to me Wall street is the enemy of the people, not a benefit.

[petcraft]

08:04 AM on 07/20/2011

If all or part of your earnings are from bonds or stocks, 'Wall Street' interests, it is not your enemy ~ It MAY be survival.

[HarmonTerr]

08:57 AM on 07/20/2011

We're still off the 2008 high by 2,000. The market has been treading water since 1-20-09. Remove uncertainty and Obama's stranglehold policies and the market will skyrocket. That will be like transfusing a leukemic with stem cells.

[nyscasac]

02:49 AM on 07/20/2011

Wall Street and all who work there are the Nation's snakes who are athe very heart of our financial problems. They are the bottom feeders of society and I pray and will get down on my hands and knees to see this most vulgar group of people and most dishonest ponzi scheme fold like a house of worthless cards. I believe in a free market society but not a free for all market place run by a bunch of snakes and pirhannas and con men.

[Elwise1]

02:23 AM on 07/20/2011

RE Obama debt ceiling comments boosting the markets. Guess what's coming. There isn't time for the Congressional Budget Office to score a specific complex deficit reduction bill anymore. I saw an article today where a tenative debt bill score could not be completed until after Aug 2.
Congress must vote blind to its true impact. Moody's, Fitch and Standard & Poors are going to just love that irresponsibility. Watch out USA credit rating. Here we go! When will this story break big time? And what will be hidden in the bill without proper time to read it? And What will be its true financial impact? We are already at rolling the dice "governing".

Or else Obama has won and the GOP must give him a very simple bill with power to make decisions later.