Dow jumps over 500 points as US stocks rally on strong earnings

VIDEO: REUTERS
The Dow Jones Industrial Average finished a buoyant session a hair below session peaks, ending at 25,798.42, up 2.2 per cent or nearly 550 points.
The Dow Jones Industrial Average finished a buoyant session a hair below session peaks, ending at 25,798.42, up 2.2 per cent or nearly 550 points.PHOTO: EPA-EFE

NEW YORK (AFP) - Wall Street stocks surged higher on Tuesday (Oct 16) as a batch of strong earnings reports pushed aside lingering doubts about the economy and trade fights that have pressured markets.

The Dow Jones Industrial Average finished a buoyant session a hair below session peaks, ending at 25,798.42, up 2.2 per cent or nearly 550 points.

The broad-based S&P 500 also gained 2.2 per cent to 2,809.92, while the tech-rich Nasdaq Composite Index jumped 2.9 per cent to 7,645.49.

Investors were cheered by strong earnings from banks and healthcare companies that helped them ignore - at least for now - the worries about trade fights and higher US interest rates that sparked a steep, two-day sell-off last week.

"Today, what we are seeing is largely related to earnings results," said Ms Lindsey Bell, investment strategist at CFRA Research, who added that the earnings thus far, while upbeat, came from a relatively small number of major companies.

"It is not going to be all good news throughout the earnings season," she said.

Investment banks Morgan Stanley and Goldman Sachs won 5.8 per cent and 3.0 per cent, following earnings results.

Dow members Johnson & Johnson and UnitedHealth Group won 2.0 per cent and 4.6 per cent after reporting earnings.

Another Dow company, Walmart, jumped 2.1 per cent despite cutting its full-year earnings forecast, following spending connected to a large acquisition in India. The giant retailer argued the investment was needed to meet consumer demand as it competes with Amazon for market share.

Software giant Adobe shot up 9.5 per cent after outlining revenue targets that topped analyst expectations.

Analysts also cited Labour Department data that showed record job openings in August, suggesting a tightening labour market.