US stocks gained on Tuesday, helped by a surge in American Express Co after the Dow component said it will spin off its personal finance unit. Shares of American Express, the credit card and travel services company, spurted more than 6 percent after the company said the move would improve its profitability. The stock was the biggest contributor to the Dow.
Exxon Mobil Corp, also helped the blue chips, rising more than 3 percent after Bear Stearns upgraded the company from "peer perform" to "outperform," a day after the world's largest publicly traded oil company posted the biggest quarterly profit ever for a US company.
After the closing bell, Web search company Google Inc rose more than 4 percent in extended-hours trading after it posted a higher quarterly profit.
The Dow Jones industrial average was up 62 points, or 0.59 percent, at 10,551.94. The Standard & Poor's 500 Index was up 8.14 points, or 0.69 percent, at 1,189.41. The Nasdaq Composite Index was up 6.29 points, or 0.30 percent, at 2,068.70.
It marked the second consecutive day of gains for the three indexes, which had a poor start to the year and ended January lower.
"The market had sold off quite a lot earlier this year, but earnings reports for the fourth quarter have been basically OK," said Christine Callies, managing director and chief market strategist for Bessemer Trust. "I think investors have been doing a little bargain-hunting in the last few days."
Another positive factor on Tuesday was a drop in oil prices. NYMEX March crude futures settled $1.08 lower at $47.12 a barrel. High oil prices raise concerns that higher energy costs will hurt corporate profits and curb consumer spending, and a fall in prices generally helps stocks.
However, investors were also looking ahead to Wednesday's interest-rate decision by the Federal Open Market Committee. The committee is expected to announce a quarter-point hike. Higher interest rates often weigh on stocks because they raise the cost of borrowing money.
Economic news was mixed - US factory output grew more slowly in January as companies received fewer orders, although managers did show a renewed willingness to hire.
Among companies moving, American Express rose $3.40 to $56.75. Exxon rose $1.67 to $53.27.
Semiconductors helped lift the Nasdaq after broker CSFB said it upgraded its recommendation on the global chip sector. The Philadelphia Stock Exchange semiconductor index rose 1.11 percent.
In post-close action, Google rose $8.34 to $200.24 on the Inet electronic brokerage, up from its $191.90 close. "Revenue is well ahead of anybody's expectations," said Barry Randall, portfolio manager of the $100 million First American Technology Fund.
Among decliners, Tyco International Ltd fell 4.5 percent, or $1.63, to $34.51 after the diversified manufacturer posted lower-than-expected revenues and rising inventory.
Trading was active, with 1.7 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.88 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Advancers outnumbered decliners on the New York Stock Exchange by about 1 to 5 and by 9 to 7 on Nasdaq.