US stock indexes rose on Tuesday, recovering for a second day as a combination of better-than-expected earnings and an easing of turmoil in UK markets boosted investor confidence.
The S&P 500 was up 42.03 points, or 1.1%, to 3719.98, while the Dow Jones Industrial Average was up 337.98 points, or 1.1%, to 30523.80 and the tech-heavy Nasdaq Composite was up 96.60 points or 0.9% to 10772.40. The moves come a day after the major indices surge.
Large swings have become commonplace for US stocks in recent weeks. In the past two trading days, the Dow is up 3.3%, or 989.15 points, and the S&P 500 is up 4.3%, or 152.64 points. The Nasdaq rose 546.95 points, or 5.3%.
Even with some gains, all three indices remain in a bear market that has come after falling 20% or more from a recent high.
“When you’re in a bear market, you also have to see a big move in the bond markets to see meaningful moves higher for stocks. They need returns to fall significantly,” said Michael Antonelli, Baird’s chief executive and market strategist.
That didn’t happen. Instead, US Treasury yields have edged higher, with the 10-year Treasury yield on Friday hovering above 4% for the first time since 2008.
On Tuesday, the yield on the 10-year Treasury fell to 3.996% from 4.012%. Bond yields and prices move in opposite directions.
Investors had braced themselves for a difficult earnings season, as the threats of rising inflation, rising interest rates and slowing growth weighed on consumer spending and corporate earnings. However, results so far have proved better than expected, prompting a rally in US stock markets after months of declines.
“The result is not cracked yet. Consumers appear to be surprisingly resilient and it seems like companies are somehow staying afloat,” said Altaf Kassam, head of investment strategy for Europe, Middle East and Africa at State Street Global Advisors. “Results season wasn’t the collapse that people were worried about.”
On Tuesday, Goldman Sachs rose $7.14, or 2.3%, to $313.85 after earnings fell last quarter but remained above targets. Lockheed Martin‘s
Shares rose $34.53, or 8.7%, to $431.84 after the defense company said its earnings rose and maintained its full-year guidance. Meanwhile shares of Salesforce inc
rose $6.35 or 4.3% to $153.53 and Splunk inc
Soared $2.11, or 2.8%, to $76.15 after activist hedge fund Starboard Value LP spoke at a conference about the company’s stake in them.
After the market closed, Netflix said it added more than twice its expected number of new subscribers in its most recent quarter. Shares of the streaming giant are up 16% in recent after-hours trading. Shares of United Airlines were also up 8.3% after solid after-hours trading results.
Global markets were also boosted after the UK government withdrew an unpopular package of tax cuts and government bonds that raised concerns about the UK’s debt burden and prompted the Bank of England to step in to stabilize bond markets.
The Stoxx Europe 600 rose 0.3%.
Still, the BOE said it intends to start selling some of its holdings of government bonds as planned at the end of the month, following reports to the contrary.
Investors say the positive moves in stock markets this week are further evidence of the volatility that has characterized the market’s erratic move lower this year, and is unlikely to be the start of a turnaround. “Interest rates must continue to rise and central banks are still focused on inflation. The headwinds are still very strong,” said Mr. Kassam.
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