US STOCKS-Market up as oil's drop trumps earnings; Yahoo up late
* Oil drops over $3/barrel, easing consumer fears
* Coca-Cola, Wal-Mart, Caterpillar lift the Dow
* Washington Mutual, Yahoo shares rise after the bell
* Dow up 1.2 pct, S&P up 1.4 pct Nasdaq up 1.1 pct (Updates with Yahoo and Washington Mutual stock moves after the bell)
NEW YORK, July 22 (Reuters) - U.S. stocks rose more than 1 percent on Tuesday as oil prices slid over $3 a barrel, taking the edge off a raft of disappointing earnings from American Express (AXP.N) and others as well as a weak outlook from iPod maker Apple.
Oil, which last week had its biggest weekly decline ever, lost 2.4 percent in New York as the U.S. dollar rose, easing some worries about the impact of higher energy costs on consumers and businesses. U.S. front-month crude CLc1 dropped $3.09 to settle at $127.95 a barrel.
Consumer stocks like Coca-Cola (KO.N) and Wal-Mart (WMT.N) and airlines -- all sensitive to higher fuel costs -- gained as oil prices tumbled. An index of airline stocks .XAL surged 22 percent.
The drop in oil prices dominated investor attention even as several big U.S. companies reported results that reflected
that consumers are struggling. Even companies more dependent on wealthier consumers, such as American Express (AXP.N), suffered. The credit card company's stock, a Dow component, plunged 7.1 percent.
There were some bright spots on the earnings front: Caterpillar (CAT.N) shares rose 2.4 percent to $74.98 after the maker of heavy construction equipment posted a stronger-than-expected quarterly profit.
"Again it's the drop in energy prices helping the market -- the market was down quite a bit after the earnings last night, and then caught a bid with the drop in oil prices," said Frank Husic, chief investment officer at Husic Capital Management in San Francisco.
"There is a concern the whole world is going to slow and with the slowdown will come poorer times for oil."
The Dow Jones industrial average .DJI rose 135.16 points, or 1.18 percent, to 11,602.50, while the Standard & Poor's 500 Index .SPX ended up 17.00 points, or 1.35 percent, at 1,277.00. The Nasdaq Composite Index .IXIC was up 24.43 points, or 1.07 percent, at 2,303.96.
WAMU AND YAHOO UP LATE
After the bell, Washington Mutual (WM.N), the largest U.S. savings and loan posted a $3.3 billion second-quarter loss. But its stock rose 3.1 percent after it said it didn't need to raise more capital. Continued...
