NEW YORK -Stocks posted solid gains on Tuesday, led by increases in energy companies after news reports said Saudi Arabia and Russia were working toward an agreement to cut oil production. Investors also worked through the initial batch of earnings from the first quarter of the year.
The Dow Jones industrial average rose 164.84 points, or 0.9 percent, to close at 17,721.25. That was the blue-chip benchmark's best one-day increase in a month. The Standard & Poor's 500 index climbed 19.73 points, or 1 percent, ending at 2,061.72, and the Nasdaq composite increased 38.69 points, or 0.8 percent, to finish at 4,872.09.
Corporate earnings got underway on a weak note after Alcoa (AA), the aluminum mining giant, reported a 15 percent decline in revenue late Monday. Alcoa also had a huge drop in first-quarter profit from a year earlier as aluminum prices fell. Alcoa's stock fell 26 cents, or 2.7 percent, to $9.48.
Later this week big U.S. banks will start releasing their results, including JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC). Investors will be watching the banks to see how well they've weathered the market's recent volatility and low oil prices earlier this year. Banks are often seen as a proxy for how the U.S. economy is doing.
"It's not going to be a clean earnings season for financials at all," said Peter Stournaras, a portfolio manager at BlackRock. "The banks have suffered from fears about oil loans, but those fears are overblown."
Expectations for earnings are low this quarter. Analysts surveyed by FactSet expect corporate profits to be down 9.1 percent from a year ago, hurt primarily by the steep drop in oil prices and other commodities. The entire energy sector is expected to report a loss this quarter, according to FactSet.
"Earnings will paint an important picture over the next few weeks, but the more important story is the continued improvement in the macroeconomic environment here in the U.S. and globally," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.
Oil prices moved sharply higher after Russian officials told Interfax, the Russian news agency, that they planned to reach a deal with Saudi Arabia to cut oil production. OPEC ministers meet this Sunday in Doha, Qatar.
Benchmark U.S. crude oil climbed $1.81, or 4.5 percent, at $42.17 a barrel in New York. Brent crude, the international standard, rose $1.86 to $44.69 a barrel in London.
Energy stocks, which have been beaten down in recent months, followed the price of crude oil higher. The energy component of the S&P 500 jumped almost 3 percent.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 1.77 percent from 1.73 percent late Monday. The euro fell to $1.1397 from $1.1412 while the dollar rose to 108.53 yen from 107.94 yen.
In other energy commodities, heating oil rose 6 cents to $1.276 a gallon, wholesale gasoline rose 3 cents to $1.534 a gallon and natural gas rose 9 cents to $2.004 per thousand cubic feet.
Precious and industrial metals prices closed broadly higher. Gold gained $2.90 to $1,260.90 an ounce, silver rose 25 cents to $16.22 an ounce and copper climbed six cents to $2.15 a pound.