Stocks rose for a second day on Tuesday, recording a small gain after a batch of better-than-expected earnings reports from big companies.
The S&P 500 rose 1.1 percent, adding to a 2.7 percent gain on Monday and pushing the index further into positive territory for the month.
Investors are watching companies that are reporting earnings this quarter to get a sense of how they are faring as worries grow about persistent inflation and a potential recession. Goldman Sachs, Johnson & Johnson and Lockheed Martin reported quarterly profits that beat analysts’ expectations on Tuesday, a day after Bank of America, Charles Schwab and other bellwether firms reported surprisingly robust results. That was partly because forecasts had been lowered, given the economic jitters: Goldman’s third-quarter profit fell more than 40 percent from a year earlier.
The KBW Bank index, which tracks big banks, rose about 1.1 percent on Tuesday. The index is up 2.6 percent since Thursday, right before major banks began to report earnings. Still, the index is down about 23 percent since the beginning of the year.
Some analysts have cautioned against reading into the market gains, describing them as “bear market rallies” that will eventually give way to more selling. Even after big gains in three of the past four trading sessions, the S&P 500 is down more than 20 percent this year, the threshold for a bear market.
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The decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.
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- Weathering the Storm: The rout in the stock and bond markets has been especially rough on people paying for college, retirement or a new home. Here is some advice.
- College Savings: As the stock and bond markets wobble, 529 plans are taking a tumble. What’s a family to do? There’s no one-size-fits-all answer, but you have options.
“When you have bad news day after day and the market’s been down day after day, people will hang on to any good news they get and magnify it,” said Ed Cofrancesco, the chief executive of International Assets Advisory.
A survey of fund managers by Bank of America said the market might be poised for another bear market rally if U.S. Treasury yields, a benchmark for borrowing costs, stayed under 4 percent. The yield on the 10-year Treasury note fell just below that level on Tuesday and the two-year fell to 4.4 percent. Yields move inversely to prices.