US stocks surged higher for another day, as earnings season ramped up, extending a recovery that began the week.
At the start of trading, the S&P 500 increased 2.3%, while the Dow Jones Industrial Average gained 600 points, or 2%. The heavily tech-focused Nasdaq Composite increased by 2.8%.
The largest investment bank on Wall Street, Goldman Sachs (GS), reported third-quarter profits on Tuesday morning that above analyst expectations overall despite difficult year-over-year comparisons. This improved sentiment. Early in the day, shares increased by more than 5%.
CEO David Solomon expressed concern that there was a “good risk” the American economy would contract in 2023.
The advances early on Tuesday follow a rally in which all three major averages participated, with gains of 2.7%, 1.9%, and 3.4% for the S&P 500, Dow, and Nasdaq, respectively, in the previous session.
The co-founder of DataTrek Research, Jessica Rabe, noted in a note, “As we continue to remind you, this kind of outsized move is not on its own historically indicative of either a robust market or an investable low.”
Last year, there were 54 days on average in which the S&P 500 increased by more than 1%. The benchmark index has only hit this significant milestone seven other times in the past six decades: during the Saudi oil embargo, the 2000 Dotcom Bubble, the 2008 Global Financial Crisis, and 2020’s pandemic meltdown. Monday’s bounce raises the year-to-date tally of such rises to 100.
Investors have increased their wagers that the market has reached a bottom as capital inflows to equities last week were close to a record. However, a lot of Wall Street strategists have suggested that the confidence is unwarranted, especially as what is anticipated to be a tumultuous earnings season begins.
Wall Street will be evaluating the profits of businesses including Johnson & Johnson, Hasbro, Netflix, and United Airlines on Tuesday, which will keep investors busy.
