Blue Chips Bounce Back as J&J Leads Stocks Higher

By JONATHAN CHENG

Stocks clawed back some of Monday's losses, as positive earnings news helped buoy the market.

The Dow Jones Industrial Average rose 65.16 points, or 0.5%, to end Tuesday's session at 12266.75, while the Standard & Poor's 500-stock index added 7.48 points, or 0.6%, to 1312.62, and the Nasdaq Composite edged up 9.59 points, or 0.4%, to 2744.97.

The modest gains came one day after the Dow fell 140 points on credit-ratings firm Standard & Poor's decision to lower its outlook on the U.S. government's triple-A credit rating. Traders and investors said that many of those worries were being shrugged off a day later.

Jonathan Cheng explains how earnings helped stocks bounce back from yesterday's steep selloff and why gold hit $1500 an ounce for the first time.

"What strikes me is the absolute skittishness of this market and the speed with which it can change its sentiment," said Max Bublitz, chief markets strategist at SCM Advisors. "To me, the trend is in place, and the rest is just noise."

Johnson & Johnson led the Dow higher, gaining $2.23, or 3.7%, to $62.69, after the blue-chip health-care and consumer-products company beat first-quarter earnings expectations and raised its full-year earnings outlook. The New Brunswick, N.J., conglomerate didn't address negotiations to acquire medical-device maker Synthes.

Energy stocks also were strong, as oil jumped to over $108 a barrel. Exxon Mobil gained 70 cents, or 0.8%, to 83.80, while Chevron added 90 cents, or 0.9%, to 105.40.

Financial stocks were mixed as a number of big banks reported earnings. Goldman Sachs Group's first-quarter earnings and revenue easily topped forecasts, but concerns arose about the sustainability of its gains. Goldman fell 1.92, or 1.3%, to 151.86.

"Goldman is talking about regulatory uncertainty, citing the economy, lower client activity. For a trading firm and investment bank, that's a code word for 'less going on,' less opportunities to be making money on a transactional basis," said Michael Shea, managing partner at Direct Access Partners, an institutional brokerage.

Northern Trust tumbled 2.73, or 5.3%, to 48.67, after first-quarter profit fell on persistently low interest rates, missing Wall Street expectations. Bank of New York Mellon dropped 85 cents, or 2.9%, to 28.35, after earnings from continuing operations at the custodial bank missed consensus estimates, while State Street gained 1.02, or 2.3%, to 45.69, after revenue and operating earnings beat expectations.

U.S. Bancorp fell 31 cents, or 1.2%, to 25.25, and Comerica dropped 82 cents, or 2.2%, to 36.64, as the lenders saw their earnings soar, though in both cases the gains came largely from drops in loan-loss provisions. Citigroup climbed 11 cents, or 2.5%, to 4.53, while J.P. Morgan Chase gained 69 cents, or 1.6%, to 44.65.

Texas Instruments slipped 25 cents, or 0.7%, to 34.54, after reporting late Monday that first-quarter earnings and its second-quarter outlook were below estimates.

In economic news, U.S. home construction in March bounced back from the previous month's low levels, though overall numbers for the sector remained weak.

 

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Write to Jonathan Cheng at jonathan.cheng@wsj.com