NEW YORK – Industrial stocks pulled the market higher Tuesday after Boeing Co. and equipment maker Illinois Tool Works Inc. said they are seeing demand increase.
The Dow Jones industrial average rose about 130 points in midday trading. The Dow and other major stock indexes rose more than 1 percent.
At the same time, a gain in the euro and an advance in European stock markets signaled that traders around the world are less worried that debt problems will disrupt a global recovery.
The climb in U.S. stocks was broad, but industrials made some of the biggest advances. Boeing Co. rose 3 percent after increasing production for production of the 737 jet. Boeing said customers are adding to existing orders and placing new ones. Illinois Tool rose about 1.2 percent after it raised the lower end of its fiscal second-quarter earnings target.
"We're still seeing factories and manufacturing help provide a little stimulus for the economy here," said Michael Church, president at Addison Capital Group in Philadelphia.
Traders shrugged off a weaker-than-expected earnings report from electronics chain Best Buy Co. Its shares fell 6.7 percent.
Stocks drew strength from gains in European markets, which reversed early losses. The euro rose to $1.2319 in an indication that traders are more confident that European governments can slash debt without spoiling an economic rebound.
The drop in the dollar against the euro boosted commodities prices because they become more affordable for overseas buyers when the dollar falls. That, in turn, increases demand.
The initial drop in overseas stocks came a day after Moody's cut its rating on Greece's debt to "junk" status. Traders in the U.S. initially had little reaction to the report Monday afternoon, but a broad gain in stocks faded by the close. Major stock indexes ended mixed after the downgrade and after the Standard & Poor's 500index failed to push above its average close of the past 200 days. That's a key technical level watched by traders. Trading below that level is seen as a sign of weakness in the market.
The advance Tuesday extends the choppy trading that has become a fixture in the market since major stockindexes climbed to their 2010 peaks in late April. Stocks have been logging big swings since then, a sign that traders are uncertain about whether the economy will continue to recover.
In midday trading, the Dow rose 129.61, or 1.3 percent, to 10,320.50. The broader S&P 500 index rose 15.10, or 1.4 percent, to 1,104.73, and the Nasdaq composite index rose 39.72, or 1.8 percent, to 2,283.68.
Bond prices fell, pushing up interest rates. The yield on the benchmark 10-year Treasury note rose to 3.30 percent from 3.26 percent late Monday.
Crude oil rose 80 cents to $75.92 per barrel on the New York Mercantile Exchange.
Boeing climbed $1.93, or 3 percent, to $66.75, while Illinois Tool rose 53 cents, or 1.2 percent, to $46.18.
Best Buy's fiscal first-quarter net income and revenue fell short of analysts' expectations but the company reiterated its fiscal 2011 forecast. The report brought concerns that consumers will cut spending and hurt a U.S. recovery. Best Buy fell $2.69, or 6.7 percent, to $38.36.
Shares of BP PLC rose 93 cents, or 3 percent, to $31.60 after the credit ratings agency Fitch cut its rating on the oil company's debt. Fitch cited concerns about rising costs tied to the Gulf of Mexico oil spill that began April 20 when a rig operated by BP exploded.
BP shares fell 10 percent Monday after concerns grew about stepped-up political pressure in the U.S. to set aside money for costs related to the spill.
The Russell 2000 index of smaller companies rose 7.23, or 1.1 percent, to 659.50.
Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 391 million shares, compared with 411 million traded at the same point Monday.
Britain's FTSE 100 climbed 0.3 percent, Germany's DAX index rose 0.8 percent, and France's CAC-40 rose 1 percent. Japan's Nikkei stock average finished up 0.1 percent.
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