NEW YORK — Wall Street reversed earlier losses and rallied Tuesday after IBM approved a $15 billion stock buyback, suggesting to investors that there are still some companies out there with financial muscle. The Dow Jones industrial average rose more than 110 points.
IBM, one of the 30 companies that make up the Dow, said the buyback will boost its earnings for 2008 past Wall Street’s earlier forecasts. Shares of Big Blue vaulted $4.30, or 3.9 percent, to $114.38.
The buyback news followed two dismal economic reports showing core wholesale prices shot up more than expected last month and that consumer confidence is waning. The data reinforced worries about stagflation, a state when the economy weakens amid rising costs.
“The market is kind of overcoming negative news, which is potentially a next step toward higher prices,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “At least in the short term, it’s a nice change here.”
Tuesday’s advance extended a rally that began Monday when Standard & Poor’s affirmed the “AAA” ratings for troubled bond insurers Ambac Financial Group Inc. and MBIA Inc. MBIA, which on Tuesday said it would eliminate its quarterly dividend, was also affirmed by Moody’s Investors Service.
The Dow rose 114.70, or 0.91 percent, to 12,684.92, after declining in earlier trading.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 9.49, or 0.69 percent, to 1,381.29, and the Nasdaq composite index rose 17.51, or 0.75 percent, to 2,344.99.
Government bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.86 percent from 3.91 percent late Monday.
The dollar was mixed against most other major currencies, while gold prices edged higher.
“The market is holding up extraordinarily well given all this negative stuff,” said Scott Fullman, director of investment strategy for I. A. Englander & Co. “The market is tired of going down.”
Cementing inflation worries was oil’s surge back above $100 a barrel. Light, sweet crude rose $1.65 to $100.88 a barrel on the New York Mercantile Exchange.
Positive news from some retailers bolstered stocks:
• Target, the discount store chain, said fourth-quarter profits fell due to poor holiday sales but results came in above the average forecast. Target rose $1.64, or 3.1 percent, to $54.89.
• Rite Aid also jumped after an analyst upgraded the pharmacy chain. It rose 17 cents, or 6.5 percent, to $2.78.
• RadioShack rose after the electronics retailer posted a rise in fourth-quarter profit and higher sales than analysts predicted. RadioShack rose $3.30, or 21.5 percent, to $19.13.
