Dow jumps nearly 500 points, U.S. stocks end sharply higher as earnings season heats up Market Snapshot

By Christine Idzelis and William Watts

Major U.S. stock benchmarks closed sharply higher Tuesday, with gains led by the technology-heavy Nasdaq Composite, as investors weighed whether a raft of corporate earnings results will help markets break out of a recent rut. The stock-market gains also came amid a drop in energy prices.

How did stock indexes perform?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.47% gained 499.51 points, or 1.5%, to close at 34,911.20, snapping two straight days of losses.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.27% climbed 70.52 points, or 1.6%, to finish at 4,462.21, snapping two consecutive days of losses.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.14% advanced 287.30 points, or around 2.2%, to end at 13,619.66, also snapping two straight days of losses.

On a quiet Monday with several international markets shut, the Dow fell 40 points, or 0.1%, while the S&P 500 edged down 1 point and the Nasdaq Composite lost 0.1%. The S&P 500’s decline marked its seventh fall in the last nine sessions though Monday.

What drove markets?

Major U.S. stock benchmarks posted sharp gains Tuesday, rising amid a busy week for first-quarter earnings reports and a drop in energy prices.

“We’ve got oil and natural gas down quite a bit today,” which may be behind some of the “enthusiasm” in the market, said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a phone interview. West Texas Intermediate crude for May delivery dropped 5.2% Tuesday to settle at $102.56 a barrel.

Lower energy prices help “consumer discretionary spending,” Wren said, adding that when consumers pay less at the gas pump they have more to spend in other areas of the economy. Energy /zigman2/quotes/210600058/delayed XX:SP500EW.10 -2.15% was the sole sector showing losses in the S&P 500 index Tuesday, down around 1%, according to FactSet data.

This week is one of the busiest weeks in the U.S. quarterly earnings reporting season, after a raft of banks posted somewhat disappointing first-quarter results last week.

“I would continue to forecast solid profit growth,” despite challenges companies have been facing such as high inflation, said Greg Marcus, managing director at UBS Private Wealth Management, in a phone interview Tuesday.

Johnson & Johnson /zigman2/quotes/201724570/composite JNJ -0.72% headlined the companies reporting ahead of Tuesday’s open, and International Business Machines Corp. /zigman2/quotes/203856914/composite IBM -0.90% and Netflix Inc. /zigman2/quotes/202353025/composite NFLX +0.33% report after the close. Netflix shares have been hammered this year, skidding about 42%, on investor concern about the company’s subscription numbers.

Refinitiv’s S&P 500 earnings scorecard Tuesday estimates blended earnings growth of 6.4% during the first quarter on a year-over-year basis. Excluding the energy sector, the growth rate for the index is 0.8%, the scorecard shows.

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Meanwhile, the International Monetary Fund on Tuesday said the war in Ukraine will lead to a significant slowdown in global economic growth this year , though the institution isn’t forecasting recession or stagflation for the U.S. or Europe.

The IMF said global growth would slow to a 3.6% rate this year, down from 6.1% in 2021 and 0.8 percentage points lower than in the last forecast in January. Still 3.5% growth is in line with long-run trends. The U.S. economy is expected to grow at a 3.7% rate this year, down from the prior estimate of 4%.

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