Dow back in black for '14, Nasdaq up 2.4%
The stock market recovery continued Tuesday as a big earnings beat after the Monday close from iPhone-maker Apple and strong sales of existing homes last month boosted investor sentiment, sparking early gains on Wall Street.
The Nasdaq composite finished 2.4% higher to 4419.48, helped in large part by Apple's 2.3% jump.
The Dow Jones industrial average gained 1.3% -- a 215-point climb -- to 16.614.81 while the Standard & Poor's 500-stock index ended 2% higher, to 1941.28. The S&P 500 notched its fourth straight day of gains.
"The Dow is sitting solidly higher ahead of the bell, as traders cheer the latest growth figures out of China, and last night's better-than-expected earnings data from Apple," says Alex Eppstein, analyst at Schaeffer's Investment Research. China's GDP for the third quarter clocked in at 7.3%, better than the 7.2% analysts expected.
After last week's wild swings and some steep drops, the stock market seems to have stabilized amid a solid start to the third-quarter profit reporting season, witnessed by Apple's (AAPL) strong quarterly showing powered by sales of more than 39 million iPhones.
The mood on Wall Street is slowly improving as the focus shifts to corporate fundamentals such as earnings and economic data, which continued to brighten. The latest reading on the housing market, existing home sales for September, rose 2.4%, topping expectations. Existing homes sold at an annualized clip of 5.17 million units, topping the 5.1 million expected.
While earnings reports from five Dow components came in mixed this morning before the opening bell -- with Coca-Cola (KO) McDonald's (MCD) and Verizon (VZ) falling shy of estimates, while insurance company Travelers (TRV) and United Technologies (UTX) beat forecasts -- the market was buoyed by gadget-maker Apple's very strong results and CEO Tim Cook's upbeat comments about the upcoming holiday shopping season.
So far this earnings season, 67% of the 106 companies in the S&P 500 that have reported earnings have topped forecasts, which is better than the 63% long-term "beat rate" since 1994. Profit growth is now tracking at 7%, up from 6.4% on Oct. 1, according to Thomson Reuters I/B/E/S.
A bullish session for stock markets in Europe also helped improve the mood on Wall Street.
In addition to the European Central Bank entering its second day of purchase of so-called covered bonds to help jump-start growth, markets got an added jolt when there was talk of the ECB considering buying corporate bonds. Germany's DAX stock index was up 1.9%; shares were up 2.3% for the CAC 40 in Paris and 1.7% higher on the FTSE 100 in London.
Asian stock markets ended lower Tuesday after China reported its weakest economic growth in five years.
The world's second biggest economy expanded 7.3% from a year earlier in the third quarter, slowing from 7.5% in the previous quarter. Still, that topped Wall Street expectations of 7.2% growth and eased fears that the Chinese economy was at risk for a so-called "hard landing," or a steep economic deceleration.
The fear factor related to the Ebola crisis has also ebbed, as no new cases have been reported recently and the 21-day quarantine deadline has passed for health-care workers in Dallas that treated the Liberian man there who died from the virus.
Japan's Nikkei 225 index fell 2%. The benchmark dropped as investors cashed in gains from a 4% surge the previous day.
Hong Kong's Hang Seng index was down 0.01%. China's Shanghai Composite slipped 0.3%
On Monday, U.S. stocks closed higher, adding to Friday's strong rally as investors shake off last week's volatile trading.