Stocks rose sharply Tuesday morning after the Nasdaq Composite posted its best daily performance since July.
The Nasdaq Composite led the way with a gain of 2.6%. The Dow Jones Industrial Average rose 600 points, or about 2%. The S&P 500 added 2.2%.
Strong earnings results on Tuesday morning were adding fuel to a rally that began on Monday. Shares of Johnson & Johnson rose 1.7% in premarket trading after it beat estimates on the top and bottom lines for the third quarter. Goldman Sachs rose more than 2% after strong trading results helped the investment bank beat expectations for earnings and revenue.
Those reports continued a strong stretch of earnings, including beats from Bank of America and Bank of New York Mellon on Monday.
The Dow is coming off a strong start to the week, adding roughly 551 points on Monday. The S&P 500 also rose 2.65% for the day. The Nasdaq surged 3.43% as tech stocks rebounded, led by names such as Amazon, Meta Platforms and Microsoft. It was the best day for the tech-heavy index since July 27.
Fears of a recession and overly aggressive central banks have helped push the U.S. markets to their lows of the year in recent weeks, but the solid start to earnings season may signal that the economy is currently in better shape than feared.
“3Q and 4Q earnings should confirm fundamentals remain anchored in resilient labor market and Covid reopening. Equity valuation will likely remain tied to global central bank rhetoric and rates, which is turning incrementally less negative. As such, we see equities primed for upside into year-end on resilient 2H22 earnings, low equity positioning, very negative sentiment and given more reasonable valuation,” Dubravko Lakos-Bujas, JPMorgan’s head of global macro research, said in a note to clients.
“Next year, however, we expect a more challenging earnings backdrop relative to current expectations,” he added.