The major domestic equity indexes rose more than 2 percent on Tuesday after upbeat earnings reports from major companies including UnitedHealth and Goldman Sachs and solid economic data, had the markets rebounding from a recent sharp sell-off.
Wall Street’s three major indexes chalked up their largest one-day percentage gains since March. The small-cap Russell 2000 recorded its largest single-session gain in nearly two years.
Technology, which sold off heavily in the recent pullback, led the gains with all 11 major sectors ending the day in positive territory.
Investors are expecting another strong quarter of corporate profits, hoping the reports can calm nerves following concerns over global trade tensions and rising bond yields.
Third-quarter earnings for S&P 500 companies are expected to have climbed 21.8 percent, according to I/B/E/S data.
The gains marked a partial recovery from Wall Street’s recent steep pullback from record levels. The S&P 500 last week posted its largest weekly drop since March.
The technology sector gained 3.0 percent while healthcare rose 2.9 percent. Those two groups have led the S&P 500’s advance this year.
Goldman Sachs and Morgan Stanley reported better-than-expected quarterly earnings, helped by strength in stock trading and equity underwriting, wrapping up a strong quarter for the large banks. Goldman shares rose 3.0 percent, while Morgan Stanley shares gained 5.7 percent.
In healthcare, shares of diversified product company Johnson & Johnson rose 1.9 percent, while insurer UnitedHealth Group gained 4.7 percent following their respective quarterly reports.
Adobe shares ended the day up 9.5 percent following the software company’s analyst meeting, adding to the day’s upbeat sentiment for tech.
Walmart shares rose 2.1 percent as its chief executive urged investors to revise their view of the company’s business.
After the market closed, shares of Netflix, one of the closely watched group of FANG momentum stocks, rose sharply following the streaming video company’s report.
On the downside, BlackRock shares fell 4.4 percent after the world’s largest asset manager reported its lowest sales of equity, bond and other long-term investments since the second quarter of 2016.
Shares of industrial distributor W. W. Grainger fell 11.9 percent after its report.
In economic data, industrial production increased for a fourth straight month in September, aided by gains in manufacturing and mining output, while other data showed job openings hit a record high in August.
Approximately 7.5 billion shares changed hands on the major domestic equity exchanges, a number that was below the 7.9 billion share daily average over the past 20 sessions, and well lower than busier trading days last week when the market was sliding.
Day’s Economic Data
Industrial production increased for a fourth straight month in September, aided by gains in manufacturing and mining output. However, momentum slowed sharply in the third quarter.
Other data on Tuesday indicated job openings hit a record high in August, far outpacing a rise in hiring, suggesting that companies were increasingly being starved of workers. There are concerns that the worker shortage, especially in manufacturing and construction industries, could hinder economic growth.
The Federal Reserve said industrial production grew at a 3.3 percent annualized rate in the third quarter, decelerating from the 5.3 percent pace logged in the second quarter. Apparently there was a minimal impact to production from Hurricane Florence, which drenched South and North Carolina in mid-September.
Manufacturing output increased 0.2 percent in September, the smallest gain in four months, after rising 0.3 percent in August. A 1.7 percent increase in motor vehicle production helped to lift manufacturing output last month.
Motor vehicle production rose 4.3 percent in August. There were also strong increases in the production of primary metals, machinery and wood products last month.
Manufacturing, which accounts for about 12 percent of the economy, is being supported by a strong domestic economy. Momentum is, however, slowing against the backdrop of a strong dollar and cooling global growth, which is restraining exports.
While there are few signs the bitter trade war with China is undercutting production, manufacturers having been increasingly complaining about disruptions to the supply chain.
Manufacturing output increased at a 2.8 percent rate in the third quarter after growing at a 2.3 percent pace in the April-June period. Mining production increased 0.5 percent in September, adding to the 0.4 percent rise in August.
Oil and gas well drilling, however, fell for a third straight month in September. Mining output grew at an 11.4 percent rate in the third quarter after notching a 16.5 percent pace in the second quarter. The sector has rebounded about 24 percent from its trough in 2016.
Utilities output was unchanged in September after rising 1.1 percent in the prior month. An increase in natural gas output was offset by a decline in the production of electricity.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.1 percent. It increased to 78.0 percent in the third quarter, the highest level since the first quarter of 2015, from 77.8 percent in the April-June period.
The industrial production data strengthened expectations of strong economic growth in the third quarter. Growth forecasts for the July-September period are above a 3.0 percent annualized rate.
In a separate report, the Labor Department said there were 7.14 million job openings in August. That was the highest level since the series started in 2000 and compared to 7.08 million vacancies in July.
The increase in vacancies was concentrated in the finance, business and professional services, and healthcare sectors.
The job openings rate also rose to an all-time high of 4.6 percent from 4.5 percent in July. Hiring increased to a record high 5.78 million in August from 5.71 million in the prior month. That lifted the hiring rate to 3.9 percent from 3.8 percent in July.