US stocks rally on upbeat earnings, housing data

NEW YORK—US stocks notched up solid gains Tuesday as investors weighed positive company earnings and better-than expected data on the sick housing sector.

The Dow Jones Industrial Average rose 65.16 points (0.53 percent) to close at 12,266.75, while the tech-heavy Nasdaq Composite added 9.59 points (0.35 percent) at 2,744.97.

The broad-market S&P 500 stock index advanced 7.48 points (0.57 percent) to 1,312.62.

After a midday slump, the equity markets recovered to end the day clawing back some of Monday’s sharp losses after a Standard & Poor’s downgrade of the US sovereign debt outlook to “negative” from “stable.”

“The US stock market continues to be very resilient in light of all the things that have happened year-to-date including the oil price shock, turmoil in the Middle East, the Japanese earthquake and tsunami, the federal budget showdown, more European bank concerns, yesterday’s negative credit warning on US Treasury securities, and record-high gold prices,” Frederic Dickson at DA Davidson & Co.

Positive sentiment was “fueled by a plethora of favorable data from the earnings and economic fronts,” Charles Schwab analysts said in a client note.

“Goldman Sachs Group Inc. easily exceeded analysts’ earnings and revenue projections, along with Dow member Johnson & Johnson,” they added.

Health-care giant Johnson & Johnson led the Dow gainers, surging 3.7 percent to $62.69 after reporting a 23 percent drop in net profit that was better than the consensus forecast.

Wall Street investment bank Goldman Sachs reported a 72 percent drop in first-quarter profit from a year ago on falling revenue, but cited improving market and economic conditions. Goldman shares slid 1.2 percent to $151.86.

On the merger and acquisition front, US exchange operators Nasdaq and ICE announced Tuesday a sweetened bid to buy NYSE Euronext, offering to pay it $350 million if the deal fails to meet regulatory muster.

Their April 1 cash-and-stock offer had been rejected by NYSE Euronext, which is pursuing an agreed merger with Germany’s Deutsche Boerse.

NYSE Euronext said its board would review the latest merger proposal “in due course.”

NASDAQ OMX slipped 0.6 percent to $27.46 and ICE was down 0.4 percent at $119.33; Deutsche Boerse leaped 1.2 percent to $7.60.

Investors digested improved numbers on the deeply depressed housing sector.

Construction of new homes rebounded in March, with gains in both starts and permits, the Commerce Department reported.

“Residential construction regained some lost ground in March, but construction starts remain very low from a historical perspective,” said Alexander Miron at Moody’s Analytics.

US stocks tumbled Monday after the S&P’s first warning on US debt. The Dow fell 1.14 percent, the Nasdaq skidded 1.06 percent and the S&P 500 shed 1.10 percent.

The bond market, which had finished higher despite the S&P warning, continued to firm. The yield on the 10-year Treasury fell to 3.35 percent from 3.37 percent late Monday, while that on the 30-year Treasury slipped to 4.43 percent from 4.45 percent.

Bond yields and prices move in opposite directions.