(CBS/AP)-- Stocks stormed higher Tuesday after promising signals about the profitability of U.S. companies and a strong debt auction by Spain. The Dow Jones industrial average headed for its biggest gain in a month.
European stocks had their best day in four months after Spain, the latest flashpoint in the European debt crisis, attracted strong investor interest at an auction of two-year debt.
Spain's borrowing costs fell, as measured by the yields on Spanish bonds being traded in the market. Those yields had risen in recent days closer to levels that might force Spain to seek an international bailout.
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"There's no doubt that gave the market a second wind," Anthony Chan, chief economist with J.P. Morgan Private Wealth management, said of the debt auction. "The market is reassessing and feeling a little better."
The Dow Jones industrial average climbed more than 200 points and was up 204 at 13,125 just after 2:30 p.m. EDT. The Dow has had only one 200-point rise this year, a gain of 218 points on March 13.
Doreen Mogavero, a floor broker at the New York Stock Exchange, said people are eager for good news to trade on, and that can lead to sharp reactions in the indexes.
"This earnings season, expectations were low, and it's going to be easy to beat that," said Mogavero, the founder and CEO of Mogavero Lee & Co. Inc. (KO), a small brokerage of stocks for institutional clients.
They got that good news Tuesday: Coca-Cola said its first-quarter profit was better than Wall Street analysts had forecast. Goldman Sachs Group, Inc. (GS) and Johnson & Johnson (JNJ) also posted strong results.
After nine straight quarters of growth, earnings for companies in the S&P 500 index were expected to be roughly flat for the first quarter. The slowdown was expected because of global threats from Europe and China and the difficulty of beating double-digit gains in recent quarters.
Markets have been encouraged so far by companies that beat analyst expectations, Chan said. But he warned against judging the quarter based on the small number of companies that have reported at this early stage.
Coke stock leapt 2.6 percent. Traders did not appear as impressed by Goldman Sachs and Johnson & Johnson. J&J was flat, while Goldman fell nearly a percent.
The Standard & Poor's 500 index added 23 points to 1,392. All 10 of its industry groups were higher, led by information technology stocks.
The Nasdaq composite index soared 63 to 3,051, its best day in three weeks. Apple, the most valuable company in the world, rose 4.4 percent after five straight days of losses that wiped out about $60 billion in market value.
In Spain early Tuesday, the government sold more than euro3.2 billion ($4.2 billion) in short-term debt, more than had been expected. The yield on Spain's 10-year government bond fell to 5.86 percent from 6.10 percent early Monday, a sign of improving confidence in the country's finances.
The cost of insuring Spanish debt against default pulled back from a record high, another sign that the auction reassured bond investors. The cost of insuring euro10 million in Spanish debt for five years had soared to euro522,000 per year on Monday. After Tuesday's auction, it fell to euro489,000.
Italy's benchmark stock index rose 3.7 percent. France's and Germany's gained 2.7 percent. The broad STOXX 50 index of European shares rose 2 percent, the most since November.
In the United States, the rally followed a batch of mixed economic news. The number of permits requested by homebuilders for future projects reached a 3½-year high, an indication that the housing market might stop weighing down the economy. But builders broke ground on homes at a slower pace in March.
Factory output fell after four strong months of gains.