Dow soars as investors cheer fat corporate profits
Corporate America is coming to Wall Street’s rescue.
The Dow soared 548 points, or 2.2%, on Tuesday as investors cheered fat profits from major companies and relative calm in the bond market. The huge rally, the Dow’s best day since March, helped the index recover a chunk of last week’s hefty losses.
Tech stocks, the biggest losers during the market turmoil, raced back to life. The Nasdaq spiked nearly 3%, while the S<><><><><><>&P 500 advanced 2.2%./ppInvestors piled back into tech darlings. Amazon, Facebook and Netflix closed sharply higher./pp”It’s a bounce back after an overdone situation last week,” said David Joy, chief market strategist at Ameriprise Financial./ppMarket sentiment was lifted by earnings beats from Goldman Sachs, Morgan Stanley and Johnson <><><><><><> Johnson. Adobe and UnitedHealth added to the good news by offering upbeat guidance for 2019./ppTaken together, the corporate report cards underscore the ability of businesses to cash in on the strong US economy. And the results should ease fears about the US-China trade war./pp”We’re focusing back on fundamentals,” said Dan Suzuki, portfolio strategist at Richard Bernstein Advisors. Suzuki called Tuesday’s rally a “reflexive rebound.”/ppLast week, the Dow, S<><><><><><><><><><><><><><><><><>P 500 and Nasdaq all suffered their a href=”http://www.cnn.com/2018/10/12/investing/dow-stock-market-today/index.html”worst week since March/a. At one point, the Dow plummeted more than 1,000 points in just two trading days./ppDespite Tuesday’s advance, all three major indexes remain firmly in the red for the month./ppOne major source of investor nervousness has improved: bond yields. A sudden spike in 10-year Treasury rates above 3.25% spooked markets. The rapid climb in rates was driven by the strong economy, the a href=”http://www.cnn.com/2018/10/15/economy/us-budget-deficit/index.html”surging federal deficit /aand concerns about a more a href=”http://www.cnn.com/2018/10/11/investing/stock-market-trump-federal-reserve-powell/index.html”aggressive Federal Reserve./a/ppInvestors feared higher borrowing costs that could slow growth and sudden competition for the stock market from boring bonds./ppBut Treasury rates, which move in the opposite direction of prices, eased late last week as investors poured cash into the safety of government bonds. Rates have stabilized at around 3.15%, relieving stock market bulls./pp”That has reassured people that this is not the start of something much worse that could really sidetrack the market,” said Bruce McCain, chief investment strategist at Key Private Bank.