Strong earnings from Caterpillar drive Dow higher

NEW YORK — Caterpillar drove the Dow Jones industrial average higher Friday after the company reported strong earnings.

The world’s largest maker of mining and construction equipment rose 3 percent after its earnings increased more than five-fold. The company also raised its sales and profit forecast for the year.

The Dow rose 68 points, or 0.5 percent, to 12,831 in afternoon trading. Caterpillar accounted for 22 points of those gains. The company has risen 67 percent over the past year on booming demand for its products.

“The industrial sector and the manufacturing sector of this country are much stronger than many investors have perceived,” said Rob Lutts, president and chief investment officer of Cabot Money Management.

Goodyear Tire & Rubber Co. rose 12 percent, the most of any company in the Standard & Poor’s 500 index, after it set a company sales record and reversed its loss from the first quarter of last year.

D.R. Horton Inc. also reported a surprisingly strong profit, sending the homebuilder’s stock up 2 percent. The company said its profit more than doubled mostly because of a large tax benefit.

The S&P 500 rose 3 points, or 0.2 percent, to 1,361. The Nasdaq composite index rose 2, or 0.1 percent, at 2,874.

Strong corporate earnings pushed major stock market indexes to 2011 highs this month. The Dow is on track to have its best month since December. On Wednesday, the S&P 500 doubled from its 12-year low reached on March 9, 2009 after the financial crisis. The Nasdaq is at its highest level since 2000.

The Russell 2000 index of small stocks also hit a record high on Wednesday after the Federal Reserve repeated its promise to keep interest rates low. That motivated investors to continue buying risky investments such as small stocks.

The Russell has soared 77 percent over the past two years. Small-company stocks tend to rise more quickly than the overall market as the economy emerges from a recession. Investors also see them as likely takeover targets for larger companies that are flush with cash. The Russell rose 5 points, or 0.5 percent, to 866.12 Friday.

Bond prices were flat. The yield on the 10-year Treasury note was unchanged at 3.32 percent from late Thursday.