NEW YORK (CNNfn) - Overwhelmed by investor optimism, Wall Street scored a triple record Tuesday as the Dow industrials, the Nasdaq Composite and the broad S&P 500 index all set new highs amid a slew of strong earnings reports and news that inflation remains low.
Calmer world markets overnight and hopes that Tokyo will fix its economic problems when a new prime minister is chosen and Russia will patch its financial holes with $22.6 billion of international aid, also contributed to the rally.
The Dow Jones industrial average soared 149.33 points, or 1.64 percent, to 9,245.54, setting a record for the first time in two months. The blue chip index hit its last record May 13, when it closed at 9,211.84.
Trading volume on the New York Stock Exchange reached 699 million shares with advances leading declines 1,752 to 1,182.
The Nasdaq Composite rose 2.88 to 1,968.41 and the S&P 500 index gained 12.39, or 1.06 percent, to 1,177.58, both closing at record highs. (Look here for the performance of widely held stocks.)
Despite Tuesday's positive earnings news and the market's strong performance, Todd Eberhard, stock strategist at Eberhard Investment Associates, said he still has questions about how long the rally will last and whether or not earnings in the quarters to come will be just as solid. (228K WAV) or (228K AIFF)
The bond market slumped, hurt by renewed declines in the dollar. The benchmark 30-year Treasury bond fell 10/32 of a point in price, for a yield of 5.71 percent. The market had started the day with modest gains, helped by news of tame consumer inflation and slower-than-expected retail sales in June.
The dollar slipped against the Japanese yen and posted miniscule gains against the German mark as investors remained cautious amid growing uncertainty over Tokyo's economic reforms and rebounding Russian financial markets.
It's earnings time again
In stocks, a series of strong earnings reports from major companies and expectations for more to follow helped propel the market higher.
Investors rewarded shares of Dow component J.P. Morgan (JPM), pushing them up 7-9/16 to 133-9/16 after the venerable Wall Street institution reported a second-quarter profit of $1.96 a share, excluding a one-time gain. Analysts had expected the company to earn $1.90 a share in the quarter.
Other financial powerhouses were less fortunate, however, with Merrill Lynch (MER) losing 2-5/8 to 105-5/16 after reporting record earnings of $1.33 a share, but failing to meet expectations of $1.34 a share. And shares of Donaldson, Lufkin & Jenrette (DLJ) fell 1-9/16 to 61-1/2 even after the company said it earned a record $1.05 a share in the second quarter, beating forecasts for earnings of $1.02 a share.
Among Dow components, strike-plagued General Motors (GM) saw its earnings tumble to 52 cents per diluted share in the second quarter from $2.67 a year earlier. Its stock price, however, moved in the opposite direction, rising 3/4 to 69-5/8.
And Johnson & Johnson (JNJ) climbed 2-7/16 to 74-1/4 after the consumer products maker said it earned 74 cents per diluted share in the second quarter, matching market expectations.
Among companies expected to release their earnings after the closing bell, shares of computer chip heavyweight Intel (INTC) lost 1-11/16 to 80-11/16. Shortly after the market closed, Intel reported a second quarter profit of 66 cents per diluted share, down from 92 cents a year earlier and two cents short of Wall Street expectations.
Other technology stocks were mixed, with Microsoft (MSFT) down 1-1/16 to 116-1/2 and Dell (DELL) up 1-3/16 to 107-3/8.
Airline stocks also flew higher, pushing the Dow transports index up 57.46, or 1.61 percent, to 3,618.73. Gainers in the sector were led by Delta Air Lines (DAL), whose shares rallied 6-5/16 to 142-3/16 after the company announced a 2-for-1 stock split and said it will buy back $750 million of its common shares over the next 18 months.
Finally, in the day's other market movers, shares of Cendant (CD) continued to plunge, losing 3-1/4, or more than 17 percent, to 15-5/8. The real estate and travel services conglomerate said accounting irregularities at its CUC International division were even worse than had been suspected and would cause Cendant's earnings for the past three years to be restated.
(Click here for a look at CNNfn's market movers. 
-- by staff writer Malina Poshtova Zang
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