Stock prices rebounded Tuesday despite a sharp increase in oil prices.
The Dow Jones industrial average gained 56.64 points to 12,533.80. The Nasdaq composite index added just 0.34 points to 2,431.41.
Oil prices moved higher following an announcement from the Department of Energy that its plans to more than double the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels. Crude closed at $55.04 a barrel, up $2.46. Energy Secretary Samuel Bodman said the move is "a wise and prudent decision to provide additional layer of protection."
In addition to President Bush's speech, investors will also be anticipating reports on new and existing home sales later this week.
Exxon Mobil Corp. (NYSE: XOM) led blue chips and was among the Dow Jones industrials' biggest gainers, while fellow refiners ConocoPhillips (NYSE: COP) and Chevron Corp. (NYSE: CVX) also surged during the session. The advance in oil stocks helped the Dow recover from an 88-point decline Monday, its biggest drop in two months and a reaction to investor uneasiness about earnings.
The markets also got a lift Tuesday from robust earnings reports from United Technologies Corp. (NYSE: UTX) and Texas Instruments Inc. (NYSE: TXN). This helped offset a warning from telecommunications equipment maker Alcatel-Lucent (NYSE: ALU) that it would not post a profit during the fourth quarter because of a steep decline in sales.
"Earnings are not coming in all that bad," said Brian Gendreau, an investment strategist with ING Investment Management. "There is an absence of any real bad news, leading indicators are up, and companies are not falling off the table. That's consistent with the modest rise in the Dow."
Bill Strazzullo, chief market strategist at Bell Curve Trading, believes the market might actually be at its peak for the year. He believes stocks will pull back as it becomes increasingly likely that the Federal Reserve won't cut interest rates.
"We're in a sweet spot right now where everything is OK, and there's a little upside left. But there's also a correction out there considering the kind of advance the market has undergone," he said.
In economic news, the Richmond Fed Survey showed a slip in its manufacturing index this month. Meanwhile, the Conference Board said U.S. economic activity is set to increase slightly in the coming months.
As has been typical in previous sessions, oil companies got a boost on the rebound in crude prices. The refiners stand to benefit if the government expands its reserves. Exxon Mobil rose $1.59, or 2.2 percent, to $74.49; ConocoPhillips was up $1.59, or 2.9 percent, at $64.97; and Chevron increased $1.34 to $72.88.
This helped investors shake off Alcatel-Lucent's statement that it post a loss for the first full quarter since combining in last year's $11.6 billion deal between France's Alcatel and Lucent of the U.S. The company blamed integration costs and weaker sales because of consolidation among its customers.
Alcatel-Lucent fell $1.04, or 7.3 percent, to $13.15. Rival Tellabs Inc. (Nasdaq: TLAB) fell 7 cents to $9.95 after despite reporting a plunge in sales caused profit to fall 68 percent during the latest quarter.
However, technology stocks were up overall after chip maker Texas Instruments reported a robust quarterly profit and was upgraded by several Wall Street firms. Shares rose $1.01, or 3.5 percent, to $29.60.
United Technologies, which makes everything from air conditioners to aircraft engines, reported fourth-quarter profit rose 38 percent, which sent shares up $2.05, or 3.2 percent, to $66.14.
Bank of America (NYSE: BAC) fell 33 cents to $53.32 despite the nation's biggest retail bank saying growth in its loan business and its acquisition of credit-card issuer MBNA Corp. helped boost profit during the latest quarter. Rival Wachovia Corp. (NYSE: WB) shares rose 38 cents to $56.65 after reporting better-than-expected results.
DuPont (NYSE: DD) posted higher quarterly earnings that met Wall Street forecasts, but investors were concerned about how the impact of higher raw materials costs will impact the chemical maker. Its stock fell 43 cents to $49.67.
Advancing issues led decliners by a 3 to 2 margin on the New York Stock Exchange, where consolidated volume came to 3.02 billion shares, up from 2.89 billion shares in the previous session.
The Russell 2000 index of smaller gained 7.42, or 0.95 percent, to 785.38.
Overseas, Japan's Nikkei stock average closed down 0.08 percent. At the close, Britain's FTSE 100 was up 0.15 percent, Germany's DAX index dropped 0.13 percent, and France's CAC-40 shed 0.08 percent.
The Associated Press contributed to this report.
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