S&P 500 rises most in one month on industrial output, earnings

Stock prices posted the biggest gain in more than a month on Tuesday following a steady report on inflation and positive signs out of Europe.

The Dow Jones Industrial Average gained 127.55 points to 13,551.78. The Nasdaq Composite Index added 36.99 points to 3,101.17, and the S&P 500 Stock Index was up 14.79 points to 1,454.92.

The Department of Labor reported the Consumer Price Index rose 0.6 percent in September on higher energy prices. The gain matched a similar increase in August, the first back-to-back increases of that size in more than four years.

Commodity prices were modestly higher. Gold gained $8.70 to $1,746.30 an ounce while oil rose 24 cents to $92.09 a barrel.

Citigroup Inc. (Nasdaq: C) added 1.6 percent after Chief Executive Officer Vikram Pandit stepped down. Johnson & Johnson (NYSE: JNJ) climbed 1.4 percent after raising its 2012 forecast. Murphy Oil Corp. (NYSE: MUR) rallied 8 percent after saying it plans to spin off its U.S. refined fuels business. International Business Machines Corp. (NYSE: IBM) and Intel Corp. (Nasdaq: INTC) tumbled more than 2.4 percent after the market closed as the companies reported third-quarter results.

“Investors are cycling back into risk as earnings as well as economic numbers in the U.S. are somewhat better than expected,” said Chad Morganlander, a Florham Park, N.J.-based fund manager at Stifel Nicolaus & Co., which oversees about $138 billion in client assets. “Economic growth will continue to be sluggish even with the flickers of hope that we’ve seen this morning.”

The S&P 500 has rallied 16 percent this year and is about 7 percent below its all-time high of 1,565.15 reached in October 2007. More than 80 companies in the S&P 500 have scheduled their results this week, according to data compiled by Bloomberg. Of the 50 companies in the benchmark index that have reported since Oct. 9, 37 posted earnings that exceeded analyst estimates, the data showed.

Output at factories, mines and utilities rose 0.4 percent in September after a 1.4 percent decline in August that was the biggest since March 2009, the Federal Reserve reported Tuesday in Washington. The median estimate in a Bloomberg survey of 85 economists called for production to rise 0.2 percent. Manufacturing, which makes up 75 percent of the total, climbed 0.2 percent.

American equities followed European stocks higher as two German lawmakers said the country is open to Spain seeking a precautionary credit line. Michael Meister and Norbert Barthle, officials within Chancellor Angela Merkel’s Christian Democratic bloc, indicated a rolling back of German resistance to a full sovereign bailout for Spain.

Nine out of 10 groups in the benchmark index rose, with commodity producers and technology shares rallying at least 1.5 percent. The Morgan Stanley Cyclical Index jumped 1.8 percent, the most since Sept. 6, as investors bought shares of companies most tied to economic growth. Financial shares added 0.7 percent as a group.

State Street Corp. (NYSE: STT) increased 4.7 percent to $43.53. The third-largest custody bank reported third-quarter operating profit that beat analysts’ estimates as it earned higher fees for managing client money.

Goldman Sachs Group Inc. (NYSE: GS) slumped 1 percent to $123.22. The bank reported profit that beat analysts’ estimates on higher underwriting fees and a jump in the value of the firm’s own investments. Revenue from trading fixed-income, currency and commodities fell short of gains posted by JPMorgan Chase & Co. (NYSE: JPM) and Citigroup.

PNC Financial Services Group Inc. (NYSE: PNC) fell 4 percent, the most in the S&P 500, to $60.40. The bank reported quarterly profit that missed analyst estimates. Excluding the effects of securities transactions and integration costs, profit was $1.63 a share. The average estimate of 32 analysts surveyed by Bloomberg was $1.66.

Apple Inc. (Nasdaq: AAPL) jumped 2.4 percent to $649.79. The company sent out invitations for what it’s calling a “special event” on Oct. 23 in San Jose, Calif. Apple plans to unveil a smaller version of its iPad tablet at the event, a person with knowledge of the matter said earlier this month.

Mattel Inc. (Nasdaq: MAT) rose 5 percent, the most since July, to $37.20. The toymaker reported third-quarter profit and revenue that topped analysts’ estimates.

Kroger Co. (NYSE: KR) increased 4.3 percent to $24.43. Jefferies Group Inc. (NYSE: JEF) upgraded the stock to "buy" from "hold."