STOCKS CATCH FIRE
Biggest gain in 6 months; Netflix soars on report of strong subscriber growth
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, and finished at 2,809.92. Stocks have bounced around over the last three days, and the S&P 500 is down 4.1 from its record high on Sept. 20. The Dow gained 547.87 points, or 2.2 percent, to 25,798.42.
The Nasdaq composite climbed 214.75 points, or 2.9 percent, to 7,645.49 as technology companies reversed some of their outsize losses from the last few days. The Russell 2000 index of smaller-company stocks had its biggest rally in almost two years as it surged 43.74 points, or 2.8 percent, to 1,596.84.
Even with the big gains, major indexes are still broadly lower for the month following a two-day rout last week that erased nearly 1,400 points from the Dow.
Investors were encouraged by some good news on the economy. The Federal Reserve said output by U.S. factories, mines and utilities climbed in September despite the effects of Hurricane Florence, and the Labor Department said U.S. employers posted the most jobs in two decades in August.
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.
Netflix soared 12 percent to $387 in aftermarket trading after reporting surprisingly strong subscriber growth during the summer. That was a welcome change from the big losses it took after its second-quarter report. Netflix is up 80.5 percent this year.
In a Tuesday interview with Fox Business Network’s Trish Regan, President Donald Trump called the Federal Reserve “my biggest threat” because he thinks it’s raising interest rates too quickly.
Trump said he doesn’t speak with Chairman Jerome Powell because of the Fed’s independence, but “I’m not happy with what he’s doing because it’s going too fast” in raising rates at a time when inflation has remained relatively low.
Asked about his decision to replace Janet Yellen with Powell, Trump said: “Can I be honest, I’m not blaming anybody. I put him there and maybe it’s right, maybe it’s wrong but I put him there.”