By Jon Sindreu and Allison Prang

U.S. stocks rose Tuesday following Federal Reserve Chairman Jerome Powell's Senate testimony, while investors also continued dissecting the latest round of corporate earnings results.

The Dow Jones Industrial Average added 55 points, or 0.2%, to 25119. The S&P 500 rose 0.4% and the tech-focused Nasdaq Composite climbed 0.6%.

Mr. Powell told Congress that strong economic growth and stable inflation should keep the central bank on track to gradually raise short-term interest rates.

He added he wants inflation to stay around 2% and that the economy is "just shy" of hitting that point. He also touched on trade tensions, saying he thought countries that are open to trade have grown more quickly and commented on the new tax law, saying it was too early to see its impact.

Mr. Powell's remarks were made before the Senate Banking Committee, as part of his semiannual monetary policy report. Derivatives markets were pricing in a 62% chance that rates will rise at least twice more this year, according to data by CME Group.

Quincy Krosby, chief market strategist for Prudential Financial, said Mr. Powell's comments acknowledging the possibility and effects of a trade war were helpful. Investors were concerned that, no matter where the economy stood, Mr. Powell wanted to do four rate increases in 2018, she said.

The chairman's reassuring remarks also took eyes off Netflix, said Dan Morgan, senior portfolio manager at Synovus Trust. After the market closed Monday, Netflix reported new subscriber growth for its recent quarter that fell short of estimates, prompting shares to fall sharply. By midday Tuesday, the stock had made up some of its earlier declines and was down 4.9%.

Tech giants have been key in driving stock-market gains in 2018, and investors are looking for signs that their customer growth is in line with optimistic expectations.

So far, the second-quarter earnings season is off to a broadly positive start, even though companies have a high bar to beat: Analysts expect earnings for S&P 500 companies to grow 21% from a year earlier, according to data provider FactSet.

Among the companies whose shares rose after earnings were Johnson & Johnson and Progressive. Strong sales of J&J's cancer drugs and other medicines helped boost its revenue and earnings, pushing shares up 3.6%. Progressive, meanwhile, posted a sharply higher profit as the insurer continued to see growth in active policies and net premiums written. Its shares climbed 2.3%.

But shares of Goldman Sachs, the latest large U.S. bank to release second-quarter earnings, slid 1.2%. Despite reporting strong profits, Goldman's revenue fell below analysts' expectations. The firm also said David Solomon would succeed Lloyd Blankfein as chief executive starting Oct. 1.

"There's no reason to expect anything but impressive headline numbers," said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management. "While solid earnings growth will not come as a big surprise to most investors, it should provide a positive backdrop to markets in the coming weeks at a time where sentiment seems neutral to slightly bearish."

Oil prices steadied after steep losses Monday, with U.S. crude rising 0.5% to $68.39 a barrel.

The oil market has been buffeted by expectations of supply increases from Libya, Russia and other producers, as well as worries that weaker global economic growth will lower demand for commodities.

The Stoxx Europe 600 added 0.2%. In Asia, Japan's Nikkei Stock Average closed up 0.4%, helped by a weak yen, but Hong Kong's Hang Seng and the Shanghai Composite slumped 1.3% and 0.6%, respectively.

Write to Jon Sindreu at jon.sindreu@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

July 17, 2018 14:28 ET (18:28 GMT)

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