Stocks Rally Amid Positive Reaction To Latest Earnings News - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Tuesday, extending the recovery from the sell-off seen in recent weeks. The Nasdaq and the S&P 500 closed higher for the fourth consecutive session but remain well off their mid-September highs.

The major averages all posted substantial gains on the day. The Dow surged up 215.14 points or 1.3 percent to 16,614.81, the Nasdaq soared 103.40 points or 2.4 percent to 4,419.48 and the S&P 500 jumped 37.27 points or 2 percent to 1,941.28.

A positive reaction to the latest earnings news contributed to the rally on Wall Street, with shares of Apple (AAPL) jumping by 2.7 percent after the tech giant reported better than expected quarterly results.

After the close of trading on Monday, Apple reported fourth quarter earnings that rose year-over-year and came in above analyst estimates, reflecting strong sales of its iPhones and Mac computers.

The iPhone and iPad maker also reported better than expected sales and provided an upbeat revenue forecast for the current quarter, which includes the all important holiday season.

Illumina (ILMN), Harley Davidson (HOG), and Lexmark (LXK) also posted standout gains after reporting third quarter earnings that exceeded analyst estimates.

Not all companies reacted positively to their quarterly results, however, with shares of Coca-Cola (KO) falling sharply after the beverage giant reported weaker than expected third quarter revenues and warned of currency headwinds. Nonetheless, the broader markets also benefited from the release of a report from the Chinese National Bureau of Statistics showing that GDP growth slowed by less than expected in the third quarter.

The report said Chinese GDP grew by 7.3 percent in the third quarter, stronger than the 7.2 percent growth forecast by economists but slower than the 7.5 percent growth in the second quarter.

On the U.S. economic front, the National Association of Realtors released a report showing a bigger than expected rebound in existing home sales in the month of September.

NAR said existing home sales climbed 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September after falling 1.8 percent to a rate of 5.05 million in August. Economists had expected existing home sales to rise to a rate of 5.10 million.

With the bigger than expected rebound, existing home sales rose to their highest annual rate since reaching 5.26 million in September of last year.

Sector News

Most of the major sectors showed notable moves to the upside on the day, reflecting broad based buying interest on Wall Street.

Semiconductor stocks posted particularly strong gains, driving the Philadelphia Semiconductor Index up by 3.6 percent. The index closed higher for the sixth consecutive session, climbing well off the eight-month closing low it set last Monday.

Texas Instruments (TXN) helped lead the semiconductor sector higher, jumping by 5.3 percent after reporting better than expected third quarter results.

Considerable strength was also visible among airline stocks, as reflected by the 3.4 percent gain posted by the NYSE Arca Airline Index. With the gain, the index reached its best closing level in almost a month.

The strength in the airline sector came amid news that major carriers are raising base fares on many domestic flights despite falling fuel prices and concerns about Ebola.

Oil service stocks also saw significant strength on the day, moving higher along with the price of crude oil. With crude for December delivery climbing $0.58 to $82.49 a barrel, the Philadelphia Oil Service Index surged up by 3.2 percent.

Computer hardware, natural gas, healthcare, and networking stocks also posted standout gains, while gold stocks were among the few groups to buck the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index tumbled by 2 percent, while Hong Kong's Hang Seng Index and Australia's All Ordinaries Index both edged up by 0.1 percent.

Meanwhile, the major European markets all saw significant strength on the day. While the French CAC 40 Index surged up by 2.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index jumped by 1.9 percent and 1.7 percent, respectively.

In the bond market, treasuries moved back to the downside after ending the previous session modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 2.208 percent.

Looking Ahead

Earnings news is likely to remain in the spotlight, with Yahoo (YHOO), Broadcom (BRCM) and E*Trade (ETFC) among the companies releasing their quarterly results after the close of today's trading.

Additionally, Boeing (BA), Dow Chemical (DOW), General Dynamics (GD), and Tupperware (TUP) are among the companies due to report their results before the start of trading on Wednesday.

Economic data is likely to attract some attention on Wednesday, as the Labor Department is scheduled to release its report on consumer price inflation in the month of September.