NEW YORK — Strong profits and a bipartisan plan to lift the U.S. debt limit drove a stock-market rebound Tuesday.
Stock indexes rose after Coca-Cola, IBM and other companies reported better second-quarter earnings.
The indexes added to their gains in the afternoon after President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country’s $14.3 trillion debt ceiling.
The Dow Jones industrial average gained 202.26 points, or 1.6 percent, to close at 12,587.42. That’s the Dow’s largest one-day jump this year.
“It looks like there’s bipartisan support for a robust plan,” said Burt White, chief investment officer at LPL Financial in Boston. “The stock market had been looking for a reason to have a relief rally. And it looks like they got the start of one today.”
The ongoing deadlock in Washington over raising the country’s borrowing limit and Europe’s debt crisis have been weighing on markets this month. The Dow had slid in five of the previous seven days.
The Standard & Poor’s 500 rose 21.29 points, or 1.6 percent, to 1,326.73, its best day since March 3. The Nasdaq composite gained 61.41 points, or 2.2 percent, to 2,826.52.
Tuesday’s gains turned the three major indexes positive for the month. The Dow and Nasdaq are up more than 1 percent in July. The S&P 500 is up 0.5 percent.
Information-technology stocks led industry groups higher after IBM’s results beat analysts’ estimates. Corporate software spending held steady during the quarter. IBM’s stock rose 5.7 percent.
The tech gains could continue today. Apple reported another surge in earnings after the stock market closed as sales of iPhones and iPads again set records. The stock rose 6 percent to $399.53 in after-hours trading.
“IBM came out with really good earnings and upped (its) estimates. Other than financials, which are going to continue to be under duress, the rest of the market is going to do pretty well,” said Mark Coffelt, president and chief investment officer at Empiric Advisors.
A jump in housing construction lifted the stocks of Lennar and D.R. Horton. The Commerce Department said building of new houses and apartments increased 14.6 percent in June from the previous month. Single-family house construction rose 9.4 percent, the largest increase since June 2009, the month that marked the end of the recession. Much of the monthly increase, however, came from new apartment buildings.
Bank stocks were mixed. Wells Fargo’s profit soared 30 percent, to 70 cents per share, on stronger results from lending. Uncollected loans dropped for the sixth quarter in a row. The bank’s stock gained 5.6 percent.
Bank of America and Goldman Sachs fell after posting disappointing results.
