After a disappointing Monday, U.S. stock markets rebounded Tuesday thanks to strong second quarter earnings reports led by IBM, Coca-Cola and an increase in new housing starts. These positive economic indicators appear to have offset fears of the European debt crisis and a potential U.S. default.
IBM rose after reporting an increase in profit forecasts due to expected growth in demand for their software, according to Bloomberg. The Wall Street Journal is reporting Coca-Cola’s second quarter earnings surged by 18%, in part due to improved international growth.
Housing starts beat analysts’ forecasts and construction permits rose, Reuters reports. And unexpected success in the housing market gave investors optimism in the face of tense Washington debt ceiling negotiations.
The second quarter earnings season is off to an encouraging start as these reports follow positive announcements last week by JPMorgan, Citibank, and Google.
Goldman Sachs and Bank of America disappointed investors Tuesday according to a WSJ report. Goldman’s earnings report failed to meet expectations, sending its stock down by almost a full percentage point. Bank of America’s earnings fell as expected, as mortgage problems continue to plague the bank.
As of 10:30, the Dow Jones Industrial Average had gained 135 points on the day, with the NASDAQ and S&P up by 47 and 14 points, respectively.