By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rallied on Tuesday as
sharp gains in growth-oriented companies propelled the S&P 500
above its 200-day moving average and led the Dow to a triple-digit
gain.
Stock prices were boosted by upbeat earnings from Apple Inc. as
well as hopes of further stimulus from the European Central
Bank.
A big jump in Apple shares, the largest component of the Nasdaq
Composite, and the S&P 500, helped drive the benchmarks
higher.
The S&P 500 (SPX) gained 29 points, or 1.5%, to 1,933.06.
The benchmark index moved above the key level, fostering hopes that
last week's pullback has run its course.
The Dow Jones Industrial Average (DJI) rose 168.13 points, or
1%, to 16,566.23. The Nasdaq Composite (RIXF) jumped 74 points, or
1.7%, to 4,390.84. Biotech stocks were the biggest winners, with
the iShares Nasdaq Biotechnology ETF (IBB) up 2.2%.
Shares of Apple Inc. (AAPL) rose 2.3%, after the company
reported a 13% rise in profit, aided by strong demand for its new,
bigger-screen iPhones. Sales of iPhone 6 and the larger-screen
iPhone 6 Plus phones helped the tech giant beat Wall Street
estimates.
Morgan Stanley lifted its price target on Apple to $115 from
$110, and analysts at the investment bank said strong iPhone demand
and gross margin expansion will help drive upside for shares. Also
read: How you could have seen Apple's beat coming
Ahead of the market open, a news report suggested the ECB is
considering buying corporate bonds on the secondary markets, as it
attempts to fight deflationary pressures and revitalize the
economy.
Even as the ECB played down the news story about its plans to
embark upon a bond-buying stimulus plan, investors took it as a
good news.
"ECB (reports) and corporate earnings are propelling stocks
higher, but I think here in the U.S., basically the market has hit
a bottom and earnings are paving the way for a year-end rally which
will take us to new records highs," said Peter Cardillo, chief
market economist at Rockwell Global Capital, who said he's looking
at the S&P 500 to hit 2,075 by year end.
In sole economic news, sales of existing homes rose in
September, hitting the fastest pace in one year and rebounding from
an unexpected drop in August, the National Association of Realtors
reported Tuesday. The annual rate of 5.17 million was better than
expected.
Earnings: Harley-Davidson Inc. (HOG) shares rallied 6.5%, after
the motorcycle manufacturer posted profit that was above analyst
estimates.
Coca-Cola (KO) shares fell 5.8% after the company's revenue
slipped, while it lowered its long-term revenue target and warned
it did not expect to meet its earnings view.
Chipotle Mexican Grill Inc. (CMG) shares fell 6.6% after it
warned sales growth may slow, even as it reported
stronger-than-expected earnings late Monday.
Yahoo Inc. (YHOO) will report after the close. Follow more of
the day's big movers here.
ECB cheer: The euro (EURUSD) fell and European stocks rallied on
a Reuters report that the ECB may be investing in the corporate
bond market.
China growth slows: The Nikkei 225 index fell 2% on Tuesday,
which gave the yen (USDJPY) a boost across the board, while China's
Shanghai Composite Index fell 0.7% after data showed China's
economy grew in the third quarter at the slowest pace in five
years.
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