Caterpillar's earnings help move stocks higher

Dow Jones: 11,913.62 (+104.83) Nasdaq: 2,699.44 (+61.98) S&P 500: 1,254.19 (+15.94)US STOCKS rallied yesterday, almost wiping out this year's decline in the Standard and Poor's 500 Index, amid takeover deals, higher than estimated earnings at Caterpillar and progress in talks to tame Europe's debt crisis.

Gauges of commodity, financial and technology shares had the biggest gains in the S&P 500.

The Dow Jones industrial average was up 104.83 points, or 0.89 per cent, at 11,913.62.

The Standard & Poor’s 500 Index rose 15.94 points, or 1.29 per cent, at 1,254.21.

The Nasdaq Composite Index advanced 61.98 points, or 2.35 per cent, at 2,699.44.

The Russell 2000 Index of small companies advanced 2.8 per cent.

“The world isn’t ending,” Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati, said.

“If there’s any sentiment change after five months of market declines, you’re going to get a rebound in stock prices. The market is just hungry to get the European crisis behind us and focus on domestic news. We’re not in a recession,” he said.

European leaders in debt-crisis talks outlined plans to aid banks and ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund.

Caterpillar rallied 4.8 per cent, the most in the Dow, to $91.58. The company said full-year profit will be $6.75 a share and sales will be at the top end of a previously forecast range of $56 billion to $58 billion.

RightNow surged 19 per cent to $42.82. Oracle agreed to buy the company for $1.5 billion, gaining customer-service expertise to bolster a new Internet-based product.

Healthspring jumped 34 per cent to $53.67. Cigna agreed to buy the health maintenance organization for $3.8 billion in cash to expand the US insurer’s Medicare business.

Alcoa, a US aluminum producer, gained 3 per cent to $10.54 as metals advanced on signs of growth in China and Japan.

Kimberly-Clark lost 4.6 per cent, the most in the S&P 500, to $69.67. The maker of Scott toilet paper and Huggies diapers cut the high end of its annual profit forecast amid lower demand in North America and some developed markets. – (Bloomberg)