Stocks advance on better-than-estimated earnings reports

Stock prices were higher again Tuesday after it was announced the House of Representatives will propose a plan to suspend the debt ceiling until mid-May.

The Dow Jones Industrial Average gained 62.51 points to 13,712.21 and the S&P 500 Stock Index was up 6.53 points to 1,492.51, both new five-year highs for the blue chip indexes. The Nasdaq Composite Index added 8.47 points to 3,143.18.

After the close, Google Inc. (Nasdaq: GOOG) and IBM Corp. (NYSE: IBM) both released quarterly earnings topping expectations and the shares were trading higher in after-hours activity.

The markets were also encouraged by news from the National Association of Realtors showing the national inventory of homes for sale fell to 1.82 million at the end of December, the lowest supply level since May 2005. A separate report from Zillow said national home prices rose 5.9 percent in 2012 and prices in San Diego were up 10 percent in the same period.

Commodities followed stocks higher. Gold rose $6.20 to $1,693.20 an ounce and oil was up 68 cents to $96.24 a barrel.

Travelers Cos. (NYSE: TRV) rose 2.2 percent after fourth-quarter profit beat estimates. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) rallied 4.6 percent as copper sales rose more than anticipated and costs fell. DuPont Co. (NYSE: DD) advanced 1.8 percent after fourth-quarter profit beat estimates as demand climbed for plastics used in autos.

The S&P 500 has risen 4.7 percent in January for the best start to a year since 1997. The benchmark gauge surged to the highest level since December 2007 last week as companies including General Electric Co. (NYSE: GE) and Goldman Sachs Group Inc. (NYSE: GS) reported better-than-estimated earnings. Some 72 percent of the 76 companies in the benchmark index that have released results so far exceeded projections, according to data compiled by Bloomberg.

“Whatever happens in the near-term, there is nothing to suggest the path of least resistance is not higher over the intermediate and longer-term,” Jeffrey Saut, who helps oversee about $350 billion as chief investment strategist at Raymond James & Associates in St. Petersburg, Fla., wrote in a note to clients Tuesday. “Therefore, I would accumulate favored stocks, as well as the indices, on any ensuing pullbacks.”

The Dow Jones Transportation Average, which includes 20 members, rallied 1.1 percent to 5,757.44, a record high. Delta Air Lines Inc. (NYSE: DAL) jumped 2.9 percent to $14.01. The Atlanta-based carrier plans to cut seating capacity as much as 4 percent while working to curb labor and fuel costs that crimped fourth-quarter earnings.

Johnson & Johnson (NYSE: JNJ) slumped 0.7 percent to $72.69. Profit for 2013 will be $5.35 to $5.45 a share, the company said in a statement. The guidance missed the $5.49 average of 23 analyst estimates compiled by Bloomberg. Worldwide consumer sales declined in 2012 to $14.4 billion, a 2.9 percent decrease caused by a negative currency impact.

Boeing Co. (NYSE: BA) fell 1.2 percent to $74.16 after saying it will suspend deliveries of 787 Dreamliners while working to meet a U.S. Federal Aviation Administration directive to ensure the plane’s lithium-ion batteries are safe.

Dell Inc. (Nasdaq: DELL) climbed 2.2 percent to $13.12. The company is getting closer to clinching a leveraged buyout with Silver Lake Management LLC, and Microsoft Corp. (Nasdaq: MSFT) is planning to provide part of the funding, people with knowledge of the matter said.

Silver Lake and Dell are negotiating a price in the range of $13.50 to $14.25 a share, said one of the people, who asked not to be named because the talks are private. Microsoft is discussing contributing about $2 billion for the deal, which could be announced this week, the person said. Microsoft retreated 0.4 percent to $27.15, erasing earlier gains.

Bloomberg News contributed to this report.

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