NEW YORK – Strong earnings reports from blue chip companies are lifting stocks across the market.

Apple Inc. rose nearly 3 percent after its first-quarter earnings beat analyst estimates. The Travelers Companies and UnitedHealth also rose after beating expectations.

All 10 company groups that make up the benchmark S&P 500 index finished higher. The Dow Jones industrial average hit another high for the year.

At the market close, the Dow is up 52 points, or 0.4 percent, to 12,506. The S&P index is up 7, or 0.5 percent, to 1,337. The Nasdaq composite is up 18, or 0.6 percent, to 2,820.

Two stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 3.7 billion shares.

NEW YORK – Stock indexes finished about where they started Tuesday after a round of disappointing corporate earnings and another drop in home prices. Trading was muted ahead of President Obama’s State of the Union speech, in which he was expected to outline a plan to reduce the deficit.

Four of the 30 companies in the Dow Jones industrial average reported results before the market opened: DuPont, 3M Co., Verizon Communications Inc. and Johnson & Johnson.

3M lost 2 percent after the manufacturing company’s income fell because of higher costs. Johnson & Johnson lost 1.8 percent after reporting a 12 percent drop in income. The maker of Tylenol and other drugs was hammered by costly recalls of its products.

DuPont’s income fell but still beat expectations. Its stock rose 0.3 percent. Verizon’s stock gained 1.6 percent after the phone company’s profits surged.

Another Dow member, American Express Co., fell 2.2 percent after reporting earnings late Monday that came in below analysts’ expectations.

The Dow lost 3.33 points, or less than 0.1 percent, to 11,977.19. It had been down as many as 82 points earlier.

The Standard & Poor’s 500 index inched up 0.34, or less than 0.1 percent, to 1,291.18.

The Nasdaq composite index gained 1.7 points, or 0.1 percent, to 2,719.25.

Doug Roberts, chief investment strategist for Channel Capital Research.com, said investors were looking ahead to President Barack Obama’s State of the Union speech Tuesday night and a Federal Reserve meeting that concludes Wednesday. The Fed’s $600 billion bond-buying plan, launched in November, was partially aimed at boosting stock prices. The S&P 500 has gained 8.9 percent in the last three months.

“As long as the Fed keeps pumping money into the economy,” Roberts said, “stocks will probably keep going up.”

Prices fell in 19 out of the 20 cities tracked by the Standard and Poor’s / Case-Shiller home price index in November.

Treasury prices rose ahead of the President’s State of the Union speech as traders hoped for news on spending curbs. That would ease worries in the bond market that the U.S. might soon run up against its borrowing limit.

The yield on the 10-year Treasury note fell to 3.34 percent from 3.39 percent late Monday. Bond yields move in the opposite direction of their prices.

Three stocks rose for every two that fell on the New York Stock Exchange. Consolidated volume came to 4.6 billion shares.

NEW YORK – This is a good time to make money off of someone else’s misfortune.

One of the best, but rarely followed, rules of investing is to buy when things look bleak. Blue chip stocks in the euro zone are down 5.5 percent since it became clear in mid-April that Greece needed help to prevent it from defaulting on its debt. Some economists speculate that the bailouts of Greece and Ireland mean that the euro won’t last much longer.

Investors are waiting to see whether the European Central Bank takes additional steps this week to prevent Europe’s financial crisis from spreading to Spain and Italy. That uncertainty has created stock bargains. You may not find the same parade of once-in-a-lifetime deals as during the 2008-2009 financial crisis when General Electric Co. traded as low as $7.06 (it closed at $16.78 on Friday). But the broad retreat from anything associated with Europe means that there are easy pickings.

Take French oil giant Total SA. It has fallen 21 percent this year and is trading at a price-earnings ratio of only 8.3. “The company has become incredibly inexpensive,” says Cody Dick, an analyst with Dreyfus Worldwide Growth, a $430 million mutual fund that is buying Total. “When you look at the stock compared to its peers it’s been unjustifiably discounted.”

At $51.34, the stock costs about what it did during the financial crisis in October 2008. It comes with a dividend yield of 4.9 percent. Competitor BP PLC, meanwhile, doesn’t offer a dividend.

Though Total has its headquarters in France, its revenues are global. It drills for oil around the world and can expand regardless of the weak European economy.

Like a parachute strapped onto the back of a runner, concerns that Europe’s problems will spread have held back stocks that should have performed better. Britain’s Diageo, the world’s largest booze company and parent of brands like Johnnie Walker, Jose Cuervo and Guinness, rose 4.3 percent this year.

That is less than half the gain of the broad U.S. stock market, which rose 9.8 percent this year as retail spending increased. The U.S. also happens to be Diageo’s most profitable market. Its operating margins here top 35 percent, well above the 20 percent operating margin it averages globally. It recently lowered its prices on its premium brands, which should send sales higher.

Diageo costs $72.67, which is about the same price it did in October 2008. The company is reasonably priced at a 17.5 price-earnings ratio and offers a 4.1 percent dividend yield. That’s more than the 3 percent yield offered by a 10-year Treasury bond.

If buying alcohol companies rubs you the wrong way, then you can find a bargain with a staid phone operator. Concerns that Spain will be the next country to need a bailout have pushed the country’s stock market down 10 percent over the last month. Telefonica S.A. is down 14 percent over the same time. It costs $69.45 and trades at an 8.8 price-earnings ratio.

While the company operates phone lines and cellular phone networks in Spain, more than 60 percent of its customers live in expanding markets in Latin America. Telefonica is also the second largest wireless company in the United Kingdom and has a large number of customers in Germany and the Czech Republic.

Investors aren’t buying Telefonica because they are too fixated on Spain’s problems, says Jim Moffett, who manages the $6.9 billion Scout International Fund.

His description of the company could apply to other European blue chips.

“There is more growth there than the market is giving them credit for,” he says. “We like them not because they’re Spanish but in spite of the fact that they’re Spanish. It’s a good company in a troubled country.”

CHICAGO – Could David be losing his historical edge over Goliath in the stock market? Investors are starting to wonder.

Small-cap stocks have lost their sizzle in recent months, falling 12 percent and underperforming blue chips since the market’s powerful 13-month rally ended in April.

Such price swings are hardly unusual, and that’s only part of the evidence that suggests their latest run of dominance over large-company stocks is ending. Some experts contend they are as overpriced as they’ve been in three decades.

A new study by BNY Mellon Beta Management highlights small caps’ vulnerability. Investors, the study found, are no longer compensated for the extra risks they take buying small stocks.

“Right now there’s no benefit to investing in small caps versus large caps,” says Mark Keleher, CEO of the San Francisco-based investment firm. “The optimum time to invest in small caps may have passed.”

Investors apparently are reaching the same conclusion.

U.S. small-cap funds saw outflows of $822 million for the week that ended Wednesday, according to EPFR Global, a Boston-based firm that tracks global fund flow data. That tipped fund flows into negative territory for 2010. Less than four months after the year-to-date total reached $6.3 billion in inflows, it is now at $689.8 million in outflows.

Melissa Wedel, a research analyst at Litman/Gregory Asset Management in Orinda, Calif., has noticed a flight to higher-quality blue chip stocks from small caps among fund managers.

“Small caps are not an area one would want to be in too heavily right now,” she says, citing their comparatively higher valuations.

But the notion of small caps as laggards runs counter to what every student of investing learns early on. Small stocks as a group have outperformed large ones for at least three-quarters of a century.

Small-cap stocks, or those with market capitalizations between $160 million and $2 billion, have netted investors an average 2 percent higher annualized returns than large caps since 1927, according to Ibbotson Associates.

The performance gap widened dramatically after 2000. The Russell 2000 index of smaller companies has beaten the Standard & Poor’s 500 index, a common yardstick for large caps, in every year of the past decade except 2007. It’s up 29 percent from 10 years ago, compared with a 23 percent drop for the S&P.

A $10,000 investment in the Russell 2000 at the start of 2000 would have grown to $14,802 as of July 31, assuming all distributions reinvested, according to Morningstar Inc. The same amount put into the S&P would have shrunk to $9,080.

Small has proven better than big over the long run for several reasons.

Small companies can react faster to changes in the business environment and grow faster. They thrive when interest rates are low and financing their growth doesn’t cost as much. The comparative lack of information also means there are more opportunities for small stocks to be mispriced.

More recently, they have benefited by having limited exposure to Europe. And small caps tend to lead the way during economic recoveries; they’ve outperformed large caps in the first year following each of the last nine recessions.

What’s changed about their outlook is partly a question of timing.

If the recession ended just over a year ago, as most economists think, that means small companies’ post-recession resurgence could be largely over.

Some analysts also say the nearly unprecedented 118 percent run-up small-cap stocks enjoyed from March 2009 to late April 2010 pumped their valuations too much.

The BNY Mellon study forecast approximately equal returns for small and large caps over the next three years — a period during which interest rates are expected to rise. This is the first time since 1983, it said, that investors get no premium for sinking money into companies that have less liquidity and higher transaction costs.

But small cap boosters say concerns about the short term are overstated. Bill McVail, small-cap growth portfolio manager at Turner Investment Partners in Berwyn, Pa., says smaller companies are poised to expand as soon as employment and consumer sentiment turn around.

“Yes, they’re a little more expensive than the S&P, but their earnings growth is seemingly higher” than large caps’, he says.

Chris Retzler, portfolio manager for the Needham Small Cap Growth Fund, says long-term investors still can find bargains. Small-cap health care stocks, he says, for instance, have been avoided because of ongoing uncertainty over health care reforms. So they’re a great buying opportunity.

Even doubters aren’t saying small stocks are a terrible investment. It’s just that they’re no longer the near-automatic winner over large caps that they’ve long been.

Dirk Van Dijk, senior equity strategist for Zacks Investment Research in Chicago, is among those who now lean toward large caps that are now loaded with cash, strong balance sheets and strong credit.

“There are really good investment opportunities in good, stable, safe companies,” he says, citing Microsoft Corp. as a prominent example. “Why take the risk in companies that you have less information about, that have less access to capital and are probably dependent on one or two major customers?”