NEW YORK (TheStreet) -- Solid earnings from IBM(IBM) and Coca-Cola(KO), and progress on U.S. debt talks sent stocks soaring Tuesday.
The Dow Jones Industrial Average accelerated by more than 100 points after President Obama signaled his support for a deal that would cut the deficit by $3.7 trillion. The ambitious plan has been gaining support from Democrats and Republicans, and includes changes to Medicare and in the tax code but not Social Security. The Dow was up 211 points, or 1.7%, at 12,597.
The S&P 500 also drifted up on the news, last gaining 22 points, or 1.7%, at 1327. The Nasdaq was ahead by 62 points, or 2.2%, at 2827.
"This is the first sign that [lawmakers] are coming to an agreement on the debt ceiling," said Jim Paulsen, chief investment strategist at Wells Capital Management. "There was a big discount in the market for fear and a potential Armageddon... if it turns out better, there's room to move up."
Receding fears of a U.S. debt default triggered a gold selloff. August futures were dropping $13.40 to $1,589 an ounce, well off from Monday's record high above $1,600. August crude oil contract gained $1.76 to trade at $97.69 a barrel.
The tech sector gave stocks a lift early in the session, with IBM(IBM) shares up 4.3% at the top of the Dow. The company reported strong sales growthacross its hardware, software and services businesses late Monday, and also lifted its full-year profit outlook to adjusted earnings of at least $13.25 a share, up from its prior guidance for earnings of $13.15 a share.
Microsoft(MSFT) and Intel(INTC) were also among the top Dow gainers.
Apple(AAPL) is expected to report third-quarter earnings of $5.85 a share after the closing bell. Shares were trading 0.7% higher at $376.57. Coca-Cola(KO) was up popping by 3.7% to $69.62 after the company beat expectations by 1 cent, with adjusted earnings of $1.17 a share and said global volume grew 6% in the second quarter.
On the weaker end of the Dow were Bank of America(BAC) and Johnson & Johnson(JNJ), which reported earnings on Tuesday, alongside 3M(MMM), AT&T(T) and Verizon(VZ).
Bank of America met analysts' estimates with a loss of 90 cents a share. The loss was largely a result of the bank's recent agreement to settle claims with investors who lost money on Countrywide-issued mortgage-backed securities before the downfall of the housing market. Excluding mortgages, BofA had net income of $3.7 billion, or 33 cents a share. The stock was down 1.2% at $9.60.
Although Johnson & Johnson beat consensus estimates by 4 cents with an adjusted second-quarter profit of $1.28 a share, the company reported a 19.4% decline in quarterly profit as a result of higher litigation and recall costs. The stock was declining 0.7% to $66.61.
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