By Mark DeCambre, MarketWatch

Equities add to gains after strong JOLTS report

U.S. stocks traded stronger on Tuesday on the back of healthy earnings reports, reversing a lower finish by major benchmarks a day earlier that was led by a decline in technology and internet-related companies.

A fresh batch of corporate earnings and further developments in global tensions, surrounding Brexit and Italy's budget, remain a focus.

What are the benchmarks doing?

The Dow Jones Industrial Average was up 363 points, or 1.4%, while the S&P 500 added 39.45 points, or 1,4%. Meanwhile, the Nasdaq Composite Index was up 133.16 points, or 1.8%, at 7,506.42.

The S&P 500 has declined in seven of the past eight sessions, while the Dow slipped in four of the past five, underscoring a mostly downbeat cycle for U.S. equity benchmarks of late.

On Monday, the Dow reversed direction intraday (http://www.marketwatch.com/story/pressure-set-to-resume-for-wall-street-as-stock-futures-pitch-lower-2018-10-15) to fall 89.44 points, or 0.4%, to 25,250.55, while the S&P slid 16.34 points, or 0.6%, to close at 2,750.79. The Nasdaq Composite fell 66.15 points, or 0.9%, to finish at 7,430.74.

Seen as a major driver for stocks, third-quarter earnings season is under way in earnest this week. After a tough week for growth stocks, all eyes will be on streaming video company Netflix Inc. (NFLX) on Tuesday, which is due to report after the closing bell.

What's driving markets?

In recent weeks investors have been concerned over the pace of rising bond yields, global trade tensions and questions about economic growth, factors that have had an outsize impact on large-capitalization tech-related names with overseas operations.

Meanwhile, investors await the Treasury Department's semiannual currency report due later Tuesday. The report, and any accompanying statements by Treasury Secretary Steven Mnuchin, will be parsed for any signs that the U.S. deems China a currency manipulator.

In a late-Monday report, the Treasury said the U.S. government ran its largest budget deficit in six years during the fiscal year that ended last month. That is seen by some as unusual given the strength of the domestic economy. The deficit totaled $779 billion in the fiscal year that ended Sept. 30, up 17% from $666 billion in fiscal 2017.

Meanwhile, the market has also closely watched negotiations between the European Union and the Britain as it attempts to exit from the trade bloc in a trade agreement in hand. The potential for a clash between Italy and the European Union over Rome's budget plans (http://www.marketwatch.com/story/italys-government-oks-draft-budget-that-would-widen-deficit-2018-10-15) is also in focus. Both matters threaten to disrupt global markets should they sour.

Which data are in focus

U.S. industrial production rose 0.3% in September (http://www.marketwatch.com/story/industrial-output-up-healthy-03-in-september-2018-10-16), according to the Federal Reserve, beating Wall Street expectations of 0.1%, according to a MarketWatch Survey.

The number of job openings in the U.S. reached another all-time high of 7.1 million (http://www.marketwatch.com/story/us-job-openings-jump-to-record-71-million-2018-10-16) in August, according a report released Tuesday morning by the Labor Department. The same report showed that American workers were voluntarily quitting their jobs at a rate of 2.4% in August, matching the July reading, which was the highest since 2001.

The National Association of Home Builders Confidence Index ticked up one point to 68 in October, though it remains down from a cycle high of 74, reached in December of 2017.

What are analysts saying

Tuesday morning's gains prove that last week's declines were "just normal volatility," rather than evidence of a fundamental shift in investor sentiment, said Jim Smigiel, chief investment officer of absolute return strategies at SEI.

Nevertheless, Smigiel argued that the "the strongest gains in equity markets are behind us," and that volatility could be a constant companion for investors going forward as "the chances of a surprise on the upside are lower than surprises on the upside," when it comes to the broader U.S. economy.

Tech stocks were helping to lead the way due to "a healthy mix of positive sell-side commentary" and Adobe (GS) raising its revenue targets Monday evening (http://www.marketwatch.com/story/adobe-stock-gains-after-company-sees-better-2019-2018-10-15), according to Joel Kulina of Wedbush Securities. "No doubt an uptick in risk appetite being seen as lack of any new negatives the early driver more than anything," he wrote in a note to clients.

Which stocks are in focus

Goldman Sachs Group Inc. (GS)reported better than expected earnings per share (http://www.marketwatch.com/story/goldman-sachs-top-estimates-2018-10-16) of $6.28, versus analysts expectations of $5.38. Shares were up 1.8% in morning trading.

Morgan Stanley(GS)posted a 20% increase in profits (http://www.marketwatch.com/story/morgan-stanley-tops-estimates-with-profit-up-20-2018-10-16) to $2.15 billion. The retail brokerage's revenue grew to $4.4 billion for the quarter, 4% higher year-over-year. Shares were last up 4.5%.

UnitedHealth Group, Inc. (NFLX) helped push the Dow higher in early trading as one of its strongest gainers, after the managed health care company beat analysts earnings and revenue targets, while raising its outlook for full-year 2018 earnings (http://www.marketwatch.com/story/unitedhealth-raises-outlook-after-earnings-beat-2018-10-16) per share to $12.10, from the prior range of $11.80 to $12.05. Shares in the Minnesota-based firm rose 4.1% in morning trading.

Consumer staples giant Johnson & Johnson(NFLX)beat earnings and revenue estimates (http://www.marketwatch.com/story/jj-raises-guidance-after-earnings-beat-2018-10-16), with profits rising to $3.93 billion, or $1.44 per share, from $3.76 billion, or $1.37 per share in the year-earlier period. The New-Jersey based firm also raised its earnings outlook for the year, helping to boost its share price 1.4% after the bell.

Adobe(NFLX) shares are up 8.2% in early trading, making it one of the S&P's top gainers, following its revenue growth update late Monday.

Streaming-video group Netflix Inc. (NFLX) will report after the close of trade. Its performance will be keenly watched by investors, given the company's place among so-called FANG names, including Facebook Inc. (FB), Amazon.com Inc. (AMZN) and Google-parent Alphabet Inc., which have had a substantial influence on the broader market moves by dint of the market value of those companies.

 

(END) Dow Jones Newswires

October 16, 2018 11:45 ET (15:45 GMT)

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