By Chris Dieterich
U.S. stocks rose on Tuesday as markets stabilized after three
straight days of deep declines.
Corporate earnings were in focus after quarterly reports from
blue chips J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo
& Co. and Johnson & Johnson.
The Dow Jones Industrial Average rose 43 points, or 0.3%, to
16364 in morning trading, after climbing more than 100 points
shortly after the opening bell. The S&P 500 added four points,
or 0.2%, to 1878, while the Nasdaq Composite Index rose 10 points,
or 0.2%, to 4220.
Stocks rose even as investors piled in to government bonds.
Yields on benchmark 10-year Treasury notes fell to 2.214%, from
2.305% late on Friday. Bond yields fall when prices rise. U.S. bond
markets were closed on Monday for Columbus Day.
Uncertainty about the pace of global economic growth and changes
to the Federal Reserve's easy-money policies have combined to force
stocks suddenly and sharply lower in recent weeks. The Dow
Industrials slumped 223 points on Monday for the ninth decline over
the past 11 trading days.
Traders noted that major benchmarks closed near the day's lows
in each of the past three sessions, an indication that few buyers
were ready to step in with conviction to buy the falling
market.
"We're seeing a little of a bounce, though I'd caution that it's
early," said Ryan Larson, head of U.S. equity trading at RBC Global
Asset Management. "The market has tended to show its true hand in
the last hour."
"Action we've seen in the couple of weeks hasn't been about as
much about fundamentals as it has been about sentiment," Mr. Larson
said.
The S&P 500 finished Monday down 6.8% since closing at an
all-time high on Sept. 18, its steepest pullback since late 2012,
when investors wrestled with the implications of the so-called
fiscal cliff and political stalemate in Washington, D.C.
"The damage is becoming too hard to ignore," said Mike O'Rourke,
chief market strategist at JonesTrading Institutional Services, who
has been bearish about the market for most of this year. He said
that he anticipates that some investors are likely to move chunks
of their stock allocation to cash in the months ahead rather than
to weather more choppy trading.
European equity markets fell after Germany's closely watched ZEW
survey showed a sharp drop in economic sentiment. The Stoxx Europe
600 declined 0.3%, paring losses of as much as 1.4% earlier. German
government bonds surged to their strongest level on record.
J.P. Morgan Chase swung to a third-quarter profit, but narrowly
missed analyst estimates, as legal expenses overshadowed gains in
fixed-income trading revenue. J.P. Morgan benefited from stronger
investment banking fees, but saw a slump in debt capital
markets.
Shares declined 1%. Citigroup said its quarterly profit rose
6.6% from a year earlier, topping analyst estimates, helped by
stronger-than-expected trading revenues. The firm set plans to
further retreat from some foreign retail-banking markets. Shares
rose 1.4%.
Wells Fargo's quarterly profit met Wall Street's profit
expectations, though results showed a continued slowdown in the
bank's mortgage business. Shares declined 1.4%.
Johnson & Johnson declined 2% even after the health-care
products company said its quarterly earnings rose 59% on higher
pharmaceutical sales. The company's report is considered a
bellwether since the maker of Band-Aids and Listerine mouthwash is
involved in so many business lines.
Oil prices continued to spiral lower. U.S. crude futures
declined 2% to $84.01. Increased production in the U.S. has helped
contribute to a glut of global oil supply at a time when demand for
petroleum products, notably in Europe, is ebbing. Falling oil
prices continued to hit shares of energy companies, which led the
market lower on Tuesday. Shares of energy companies on the S&P
500 have dropped 12% over the past month.
Shares of travel and airline stocks also rebounded after taking
a hit on concerns about the spread of the Ebola virus. United
Continental Holdings Inc. and Delta Air Lines Inc. rose Tuesday
after sinking 7.3% and 6.1% on Monday, respectively.
In Asia, Japan's Nikkei fell 2.4%, while Hong Kong's Hang Seng
Index declined 0.4%. The dollar rose against the euro and yen. Gold
futures added 0.4% to $1,234.70 an ounce.
Write to Chris Dieterich at chris.dieterich@wsj.com