GOOD EARNINGS STOKE BUYING ON WALL STREET
Tuesday’s gain biggest in six months following steep losses
Reports from big names in finance and health care surprised analysts and energized investors.
NEW YORK — U.S. stocks rocketed to their biggest gain in six months Tuesday following strong earnings from major financial and health care companies as well as encouraging reports on the economy. The Dow Jones Industrial Average jumped 547 points.
Morgan Stanley, Goldman Sachs and UnitedHealth led a parade of companies that reported profits for the third quarter that surpassed analysts’ expectations. Technology companies also jumped after taking steep losses during the market’s rout last week.
The S&P 500 index jumped 59.13 points, or 2.1 percent, its largest gain since March 26. Stocks have bounced around over the last three days, and the S&P 500 is down 4.1 percent from its record high on Sept. 20. The Dow gained 2.2 percent.
The Nasdaq composite climbed 2.9 percent as technology companies reversed some of their outsize losses from the last few days.
Investors were encouraged by some good news on the economy. The Labor Department said U.S. employers posted the most jobs in two decades in August while hiring continued to increase and the Federal Reserve said output by U.S. factories, mines and utilities climbed in September despite the effects of Hurricane Florence.
Even with the big gains, major indexes are still broadly lower for the month following a two-day rout last week. The Dow slumped nearly 1,400 points as bond yields jumped and investors worried that a rapid increase in interest rates would slow economic growth.
Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute, said stocks jumped because the industrial production report suggests inflation isn’t speeding up and that investors took that as a sign the Fed won’t accelerate the pace of its interest rate increases.
“Anything that helps the market think that the Fed won’t make a mistake is good,” Wren said.
While investors’ fears about rising rates and inflation seem to have eased, trading in October has been very volatile. Before that, the third quarter was marked by the type of calm, steady gains seen throughout 2017.
The last time U.S. stocks suffered a notable slide was in March, and strong corporate earnings helped start a turnaround after that.