Big day for stocks erases earlier losses

U.S. stocks surged back into positive territory, with the Nasdaq Composite Index registering its biggest increase since March, a day after a broad-based rout sent equities negative for the year. Yields on Treasuries rose and the dollar strengthened to the highest level this year.

The S&P 500 Index finished higher for the first time in seven days, propelled by strong earnings results from Twitter, Microsoft and Tesla. Amazon and Alphabet reported after the close. The Dow Jones Industrial Average surged 400 points, after tumbling 600 points Wednesday. European stocks edged higher. The sentiment was darker in Asia, where shares fell for a third day, with Japan’s Topix index falling to the lowest in more than a year. Oil advanced from a two-month low.

“The most important thing to think about today is that we got into a valuation level that’s more constructive,” said Art Hogan, chief market strategist at B Riley FBR. “This is one of the first times in the earnings cycle where we’re getting a positive response on earnings, when stocks actually react positively to their good news — that’s in the action today.”

“There’s a transition going on and when there’s a transition going on, there’s a lot of volatility both up and down,” Randy Swan, founder of Swan Global Investments, which manages about $5 billion, said in an interview at Bloomberg’s New York headquarters. “People are trying to figure out where things are going to go.”

Sentiment has been tested in October, with global stocks poised for their worst month in more than six years as the effects of trade tensions and geopolitical uncertainty begin to bite. Investors remain apprehensive as a flood of earnings, while mostly stellar, have come with warnings about the future impact of tariffs and rising costs. Central banks remain in the spotlight, with investors speculating what, if any, impact the market uncertainty will have on policy decisions.

“The question is: Can we go the distance?” said Donald Selkin, chief market strategist at Newbridge Securities. “You have to see how it goes.”

Elsewhere, the euro weakened after European Central Bank President Mario Draghi downplayed recent slowdown in economic momentum and Italian fiscal risks, reiterating that growth is returning to potential. The ECB kept its target rate unchanged at zero.