US STOCKS-Wall Street gains as investors bet on stimulus

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* Energy stocks on track for biggest jump since June 5
* Tesla loses ground after JPM downgrade
* Coca-Cola up on demand rebound
* Dow up 1.07%, S&P rises 0.72%, Nasdaq up 0.09%

(New throughout, updates prices, market activity and comments;
new byline, adds NEW YORK dateline)
By Stephen Culp
NEW YORK, July 21 (Reuters) - U.S. stocks rose on Tuesday as
a rotation into economically sensitive cyclical stocks reflected
optimism that Washington will deliver a new round of stimulus to
sustain the U.S. economic recovery from a pandemic-induced
recession.
Financial, industrial and energy stocks provided the biggest
lifts to the bellwether S&P 500 and blue-chip Dow as investors
pivoted back to cyclicals. A drop in tech shares capped the
Nasdaq's gains.
The S&P 500 moved into positive territory year-to-date, up
more than 1%. The Nasdaq was up nearly 20% since Jan. 1, while
the Dow was down more than 5%.
"It's noteworthy, this willingness to look at value plays,"
said Chuck Carlson, chief executive officer at Horizon
Investment Services in Hammond, Indiana. "It suggests the market
thinks the global economy is going to improve."
"Ultimately it's healthier for the market when cyclicals
perform better," Carlson added.
As new infections of COVID-19 surged in the United States,
lawmakers on Capitol Hill wrestled to craft a new stimulus
package with less than two weeks until the expiry of extended
unemployment aid for millions of Americans. "There's a belief that the government is going to provide
stimulus and an assurance that the support is going to
continue," said Carlson.
For its part, the 27-member European Union reached an
agreement on a massive $857 billion pandemic recovery plan at
the conclusion of a rocky, five-day summit.
The Dow Jones Industrial Average .DJI rose 284.45 points,
or 1.07%, to 26,965.32, the S&P 500 .SPX gained 23.29 points,
or 0.72%, to 3,275.13 and the Nasdaq Composite .IXIC added
9.94 points, or 0.09%, to 10,777.03.
Of the 11 sectors in the S&P 500, all but tech .SPLRCT
were in the black.
Energy companies .SPNY were up 5.9%, the largest daily
jump since June 5, as crude prices CLc1 climbed amid signs of
rebounding demand. O/R
Second-quarter reporting season rolled on, with 58
constituents of the S&P 500 having reported. Of those, 77.6%
have come in above consensus, according to Refinitiv data.
But expectations have set a low bar. Analysts now see
aggregate S&P 500 earnings for the April to June period having
declined by 41.8% year-on-year, per Refinitiv.
Coca-cola Co KO.N shares gained 2.7% after the beverage
maker beat earnings estimates and said demand is improving.
Defense industrial Lockheed Martin Corp LMT.N topped
quarterly consensus estimates and raised its full-year profit
and resume estimates, sending its shares up 2.6%. Tesla Inc TSLA.O fell 2.4%, retreating from Monday's
record closing high after JPMorgan Chase downgraded the electric
car maker's stock to "market perform." After the bell, United Airlines Holdings Inc UAL.O is
expected to post results for a quarter that was particularly
challenging for commercial air carriers.
Advancing issues outnumbered declining ones on the NYSE by a
4.28-to-1 ratio; on Nasdaq, a 1.98-to-1 ratio favored advancers.
The S&P 500 posted 43 new 52-week highs and no new lows; the
Nasdaq Composite recorded 116 new highs and 10 new lows.

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