Stocks rallied higher on Tuesday as traders bet that Wall Street may have reached its bottom. The Dow Jones Industrial Average soared over 700 points, while the S&P 500 Index and the Nasdaq Composite rose over 2.7% and 3%, respectively.
The session's moves come after Wall Street reversed a rally on Monday in the late trading after Bloomberg News reported that Apple (NASDAQ: AAPL) plans to slow hiring and curb spending next year in anticipation of a potential economic downturn.
Here's how the market settled on Tuesday:
S&P 500 Index (NYSE: SPY): +2.76% or +105.84 points to 3,936.69
Dow Jones Industrial Average (NYSE: DIA): +2.43% or +754.44 points to 31,827.05
Nasdaq Composite Index (NASDAQ: QQQ): +3.11% or +353.10 points to 11,713.15
Investors are betting that the stock market has reached its bottom after all three major averages have fallen near, and briefly below, bear market territory since the start of the year. Earnings reports so far have shown that businesses coped with economic pressures in the second quarter.
"Both investors and the companies were expecting hot inflation, so companies talking about hot inflation having happened in that second quarter was not a surprise at all," said Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, quoted by CNBC. "What was a surprise was that they were able to manage through it well."
On Tuesday, Johnson & Johnson (NYSE: JNJ) reported earnings that beat Wall Street estimates, but the pharmaceutical giant cut its outlook for full year sales and profits, citing the impact of a stronger U.S. dollar. Meanwhile, IBM (NYSE: IBM) posted an earnings beat but also cut its forecasts for free cash flow this year due to loss of business in Russia and currency headwinds.
Elsewhere, new U.S. housing starts fell 2% in June, according to a report from the Commerce Department on Tuesday, falling to the lowest level since September 2021 as rising mortgage rates and higher home prices impacted new construction projects. Building permits also fell by 0.6% to 1.685 million.
Looking ahead, traders will respond to Netflix's (NASDAQ: NFLX) earnings report due after closing bell on Tuesday. Later this week, Tesla (NASDAQ: TSLA), American Airlines (NASDAQ: AAL), Twitter (NYSE: TWTR), Snap (NYSE: SNAP), United Airlines (NASDAQ: UAL) and Verizon (NASDAQ: VZ) are set to report.