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James Hyerczyk

The major U.S. equity markets soared on Tuesday in response to the release of strong quarterly results from several major U.S. corporations. The size of the rally has put the major indexes in a position to recapture at least 50% of last week’s extreme losses.

In the cash market, the benchmark S&P 500 Index settled at 2809.92, up 59.13 or +2.15%. The blue chip Dow Jones Industrial Average finished at 25798.42, up 547.87 or +2.17% and the tech-based NASDAQ Composite closed at 7647.06, up 216.32 or +2.91%.

The rally started early in the session with several companies reported solid earnings before the opening bell. In the financial sector, shares of Morgan Stanley jumped 5.7 percent after reporting better-than-expected earnings. Goldman Sachs rallied 3 percent after profits beat estimates.

The rally extended after the bell with investors turning towards Netflix for guidance. After the close, Netflix reported company earnings which easily beat analyst expectations and sent shares of the video-streaming giant up more than 14 percent in after-hours trading.

The S&P 500 Index was boosted by 2.5 percent gains in both the tech and health care sectors. The Dow Jones Industrial Average was driven higher by UnitedHealth and Johnson & Johnson. Both posted better-than-expected earnings.

Morgan Stanley’s quarterly results were driven by a 15 percent jump in investment-banking revenue. Goldman Sachs’ investment banking business also drove it to a better-than-expected profit.

Not everything came up roses for the Dow stocks, Walmart slashed its fiscal 2019 earnings forecast on Tuesday, citing its Flipkart acquisition.

Also after the close, shares of Dow-component IBM fell as much as 5 percent after the company reported mixed earnings for its fiscal third quarter. The company’s overall revenue came in 2 percent lower year over year, according to a statement. Analysts were expecting IBM’s revenue to drop for the quarter, which ended on September 30.

U.S. Treasury Markets

With the focus on corporate earnings on Tuesday, U.S. Treasury markets took a backseat to the stellar performance in the stock market. The lack of attention led to a mostly unchanged Treasury market with U.S. government yields little changed.

Benchmark 10-year U.S. Treasury yields settled at 3.163 percent, unchanged. The 30-year U.S. Treasury yield was also unchanged at 3.335 percent.


U.S. Economic Data

Capacity Utilization came in at 78.1%, matching last month’s reading, and falling short of the 78.2% estimate. Industrial Production was up 0.3%, slightly below last month’s 0.4% gain, but above the 0.2% forecast

The Labor Department said on Tuesday that the number of job openings in the United States jumped to a record in August.

The number of openings hit a series high of 7.1 million on the last business day of August, the government said, adding to the existing belief that the U.S. labor market is at one of its tightest points in a generation.

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