By Saumya Vaishampayan
U.S. stocks rallied Tuesday, with gains in technology stocks
propelling the Nasdaq Composite to its biggest one-day percentage
jump since January 2013.
The Dow Jones Industrial Average rose 215.14 points, or 1.3%, to
16614.81. The S&P 500 gained 37.27 points, or 2%, to 1941.28,
marking its biggest one-day percentage gain in a year.
The Nasdaq Composite rose 103.40 points, or 2.4%, to 4419.48.
Stocks closed near the highs of the session.
Gains were sparked by upbeat earnings from Apple Inc. and
reports that the European Central Bank was considering buying
corporate bonds. The Dow rose for its third session in a row, while
the S&P and Nasdaq both notched their fourth straight session
of gains.
The rebound in the last few sessions comes after a sharp
pullback. The S&P fell 7.4% from its Sept. 18 record close to
its recent closing low last Wednesday. The Dow declined 6.7%
between its Sept. 19 record close and its recent low on Thursday.
The Dow has rallied since then, with Tuesday's gains dragging the
blue-chip index into positive territory for the year, up 0.2%.
"We just got oversold," said Bill Nichols, head of U.S. equities
at Cantor Fitzgerald.
Tuesday's gains were bigger in the S&P 500 and the Nasdaq
than in the Dow, which doesn't include Apple. The company said
Monday its quarterly profit rose 13%, driven by sales of its newest
iPhones. Apple also posted record sales of its Macintosh line of
personal computers. Profit and revenue for Apple's fiscal fourth
quarter beat expectations, pushing shares up 2.7%.
"When Apple does well, tech does well, and then the Nasdaq does
well," said Aaron Jett, vice president of equity research at Bel
Air Investment Advisors.
U.S. and European shares were also buoyed by reports that the
ECB was considering purchases of corporate bonds, a move that would
strengthen the bank's stimulus efforts. Still, The Wall Street
Journal reported that no specific plan has been discussed.
The Stoxx Europe 600 jumped 2.1%. The ECB on Monday said it
began buying covered bonds.
"In Europe, which has been the cause of a lot of concerns
recently about slowing growth, you have the ECB acting again pretty
decisively in terms of buying covered bonds," said Steve Weeple,
managing director of global equities at Standard Life Investments.
"You continue to see ECB policy makers do, in their own words,
whatever it takes."
Mr. Weeple, who manages about $5 billion at Standard Life, said
he expects ECB actions and improved U.S. corporate earnings to
boost investor confidence in the U.S. stock market.
"When we looked at what was coming out, particularly out of
corporate America, we felt good about the world," he said, adding
that he used the recent pullback to buy his favorite stocks at a
discount.
Energy stocks rose 2.9%, with the sector posting the biggest
gain on the S&P 500. The sector has fallen 4.8% this month as
oil prices tumbled.
Crude-oil futures rose 0.1% to $82.81 a barrel. In other
commodity markets, gold futures added 0.6% to $1251.00 an
ounce.
In economic news, sales of previously owned homes rose 2.4% in
September to an annual rate of 5.17 million, the National
Association of Realtors said Tuesday. That is higher than the 1%
increase forecast by economists in a Wall Street Journal
survey.
Demand for safe-haven government bonds declined, pushing the
yield on the 10-year Treasury note up to 2.206%. Treasury yields
rise as prices fall.
China's National Bureau of Statistics confirmed a third-quarter
economic slowdown, but the 7.3% year-over-year quarterly growth
rate beat expectations of a median 7.2% gain forecast by 15
economists in a Wall Street Journal survey. "We've gotten used to
slowing growth rates in China," said Mr. Weeple.
U.S. corporate earnings reports continued to stream in.
Harley-Davidson Inc. rose 7.3%, one of the biggest gainers on the
S&P 500. The company reported a decline in profit and revenue
in the third quarter, but earnings topped expectations.
Weak earnings from two Dow components limited gains for the
blue-chip index.
Coca-Cola shares fell 6% after the company reported flat soda
volumes in the third quarter and an unexpected decline in revenue.
The company also introduced a new cost-cutting plan.
McDonald's Corp. said third-quarter earnings fell 30%, missing
expectations, as the restaurant company struggles to improve global
sales. Shares fell 0.6%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com