Stocks close at two-year high thanks to strong earnings reports

Better than expected earnings reports and a lift in the manufacturing sector sent the stock market to two and half year highs Tuesday.

The Dow Jones industrial average crossed 12,000 once again, and the Standard and Poor's 500 stock-index -- the benchmark for most U.S. mutual funds -- reached 1,300.

The Institute of Supply Management said that manufacturing activity expanded in January at its fastest pace in nearly seven years. Increased spending by businesses and consumers helped push the index higher, the company said.

"This is a good indicator that businesses have come out of the gate strongly in 2011," said Burt White, chief investment officer for LPL Financial. "We are seeing businesses spend again and this is exactly what we needed to see for this economy to move forward."

The better economic data helped push stocks broadly higher. All 10 company groups that make up the S&P index rose. Materials companies rose 2.4 percent, the largest gain of any group.

The Dow Jones industrial average last closed above 12,000 in June 2008, although it traded above that level several times last week before settling lower.

The S&P 500 index gained 20 points, or 1.6 percent, to 1,306. It last closed above 1,300 in August 2008.

The Nasdaq composite index rose 51, or 1.9 percent, to 2,751.