MarketView for April 17

Summary

The major equity indexes chalked up their largest gains in a month on Tuesday after Coca-Cola led a round of strong earnings and as concerns about Europe's debt crisis eased due to a decline in Spanish bond yields.

Apple ended a five-day losing streak with a rally of 5.1 percent, helping the Nasdaq close above the psychologically important 3,000 level. The stock closed at $609.70 and booked its best day in almost three months after it dropped 8.8 percent in the previous five sessions. IBM, Intel and Yahoo all exceeded consensus earnings estimates in their reports after the closing bell.

Earlier in the day, Coca-Cola, Goldman Sachs and Johnson & Johnson all reported profits that also exceeded consensus analysts' estimates in what has been a surprisingly strong start to earnings season.

The shares of companies whose results exceeded forecasts did not all rise. However, the better-than-expected results helped ease fears that earnings could start to tail off this quarter. Of the 39 S&P 500 companies that had reported earnings before Tuesday's opening bell, 74.4 percent exceeded estimates, according to Thomson Reuters data.

German analyst and investor confidence rose unexpectedly in April to a high not seen since June 2010 while better-than-expected results from Spanish debt sales boosted confidence before a long-term debt auction later in the week.

The benchmark Spanish 10-year note's yield slipped below 6 percent, but worries about Madrid's finances and the banking sector are likely to keep the pressure on in coming days.

In Tuesday's rally, each of the three major equity indexes booked their largest percentage gains since March 13.

The S&P 500 closed just shy of its 14-day moving average and easily cleared its 50-day average, suggesting a turn in momentum after the recent pullback. The benchmark dipped below the 50-day line last week for the first time in more than three months.

International Business Machines Corp reported a 15 percent increase in first-quarter earnings after the bell and raised its full-year outlook. IBM's shares led the Dow in the regular session with a 2.3 percent advance to end at $207.45, but gave up the gains after the bell.

Yahoo reported a modest uptick in first-quarter revenue and beat Wall Street's profit targets when it reported its results after the bell. Yahoo's stock gained 1.5 percent to $15.01 in regular trading and extended gains 2.8 percent to $15.43 after hours.

Coca-Cola was up 2.1 percent to $73.95 in regular trading and gave one of the top boosts to the Dow after the world's largest soft drink maker reported higher quarterly profit.

Goldman Sachs fell 0.7 percent to $116.86 after rising 2.8 percent during the previous four sessions. Earnings fell from a year earlier, but exceeded many analysts' views.

Johnson & Johnson edged up 0.4 percent to $64.22 after its quarterly earnings number rose more than expected even as revenue fell slightly.

This week, 86 S&P 500 companies are scheduled to report results.

U.S. economic reports were mixed as housing starts fell unexpectedly in March, but permits for future construction rose to their highest level in 3-1/2 years. Industrial output was flat for a second straight month in March, held back by a drop in manufacturing, a Federal Reserve report showed, while capacity utilization, a measure of how fully firms are using their resources, fell.

About 6 billion shares changed hands on the three major equity exchanges, a number that was somewhat below the year-to-date average of about 6.78 billion shares.