Stocks ride Big Blue's momentum

NEW YORK (CNNMoney.com) -- Stocks rose Monday after Dow component, International Business Machines Corp., said fourth-quarter earnings will be higher-than-expected and Credit Suisse upgraded U.S. stocks.

The Dow Jones industrial average (INDU) rose 0.7 percent about 2-1/2 hours into the session. The broader S&P 500 (INX) index was up 0.5 and the Nasdaq (COMPX) composite climbed more than 0.8 percent.

Technology blue-chip IBM said early Monday that earnings for the fourth quarter will be higher-than-expected based largely on overseas sales. The company said it expects fourth-quarter earnings of $2.80 a share, compared to analysts expectations of $2.60 a share. IBM will officially report earnings on Thursday.

"The IBM news definitely gave the market a catalyst," said Quincy Krosby, chief investment strategist at The Hartford.

Other technology companies, including Apple Inc (AAPL, Fortune 500)., Intel Corp. (INTC, Fortune 500) and Dell Inc. (DELL, Fortune 500) traded higher on the IBM news.

Also supporting stocks was a report from Credit Suisse that put the U.S. equity market in the "overweight" category, Krosby said.

The Dow Jones Newswires reported Monday that analysts at Credit Swisse moved U.S. stocks to a 5 percent overweight weighting from benchmark and downgraded European stocks to underweight based on the European Central Bank's reluctance to cut interest rates.

"There is a view that the U.S. market will see a boost from Fed accommodation and a possible stimulus package from Washington," she said.

Talk of an economic recession in the U.S. has many on Wall Street betting that the Federal Reserve will cut rates by at least a half-percentage point at the end of its two-day meeting scheduled for Jan. 30. Likewise, growing concerns about economic softness have fueled speculation that the federal government will introduce a plan to stimulate economic activity.

In other corporate news, department store operator Sears Holdings Corp., (SHLD, Fortune 500) warned Monday that it expects fourth-quarter earnings to be weaker-than-expected due to slow same-store sales growth. Shares of the company were down more than 6 percent in afternoon trading.

Investors are bracing for more bad news from the financial sector this week.

Citigroup (C, Fortune 500), the world's largest bank, is expected to to take a giant writedown when it reports its fourth-quarter results Tuesday. Separately, a report in The Wall Street Journal Monday said that the Chinese government is voicing opposition to Citi's plan to sell a $2 billion stake to China Development Bank.

Merrill Lynch (MER, Fortune 500) is also expected to report a writedown when it releases earnings Thursday. Making matters worse for the Wall Street fixture, the Journal reported Monday that Merrill is facing a Securities and Exchange Commission investigation over improper trading by a handful of current and former employees.

Market breadth was positive. On the Dow winners beat losers by roughly two to one on a volume of 507 million shares. On the Nasdaq, advancers beat decliners by about four to three on a volume of 905 million shares.

Treasury prices rose, with the yield on the 10-year note falling to 3.77 percent, from 3.80 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and the euro.

U.S. light crude oil for February delivery rose $1.01 cents to $93.70 a barrel on the New York Mercantile Exchange.

COMEX gold for February delivery spiked $8.60 to $906.30 an ounce, an all-time record high, on the weakening U.S. dollar.