Dow jumps 500 points, Nasdaq climbs 2%, solid gains bolster Wall Street rally for day two

Stocks rose sharply on Tuesday as investors sought to amplify Monday’s rally amid a busy corporate earnings week.

The Nasdaq Composite took the lead with a gain of 2.2%. The Dow Jones Industrial Average rose 520 points, or about 1.7%. The S&P 500 rose 1.9 percent.

Tuesday’s strong earnings results were adding fuel to a rally that started on Monday. Goldman Sachs rose more than 4% after strong trading results helped the investment bank beat earnings and revenue expectations.

This report continued strong bank earnings growth, including scores from Bank of America and Bank of New York Mellon on Monday. Lockheed Martin also gained nearly 3% after earnings per share beat estimates.

Elsewhere, Salesforce rose 6% after activist Starboard Value LP announced its stake in the software giant, backing Dow. Colgate-Palmolive shares gained nearly 3% after Dan Loeb’s Third Point acquired a stake in the company, CNBC’s David Faber reported.

The Dow is off to a strong start to the week, adding roughly 551 points on Monday. The S&P 500 also rose 2.65% for the day. Technology shares, led by the likes of Nasdaq, Amazon, Meta Platforms and Microsoft, rose 3.43% as they recovered. It was the best day for the tech-heavy index since July 27.

Fear of a recession and overly aggressive central banks have helped push U.S. markets to year-lows in recent weeks, but a solid start to the earnings season could signal the economy is currently in better shape than feared.

“Q3 and Q4 earnings should confirm fundamentals are fixed to the flexible labor market and Covid reopening. Equity valuation will likely depend on global central bank rhetoric and rates that are becoming less and less negative. So we see stocks poised to rise for the year. Dubravko Lakos-Bujas, JPMorgan’s head of global macro research, said in a note to clients that it ended with durable 2H22 earnings, lower equity positioning, very negative sentiment and a more reasonable valuation.

However, we expect a more challenging earnings base next year than current expectations.”

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