July 19 (UPI) — U.S. stocks rallied Tuesday lifting all three major indexes above their lows from last month as investors bet that markets had found a bottom.
The Dow Jones Industrial Average closed the day up 754.44 points, or 2.43%, while the S&P 500 gained 2.76% and the Nasdaq Composite rose 3.11%.
Tuesday’s gains placed all three major indexes above their 50-day moving averages for the first time since April, while the broader market index rose 8% from its June lows.
The rally came as investors attached their hopes to the latest round of earnings reports which showed that businesses are adapting to economic pressures more easily than expected, possibly indicating that markets have reached a bottom.
As of Tuesday morning, roughly 9% of S&P 500 companies have reported second-quarter earnings and about two-thirds have surpassed analysts’ expectations.
“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,” Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said. “What was a surprise was that they were able to manage through it well.”
Netflix stock rose 5.61% during regular trading as the streaming giant was set to release its quarterly earnings results after the bell.
The company reported it lost 970,000 subscribers in the second quarter, much lower than Wall Street’s expectations of 2 million users lost, while also narrowly missing on revenue expectations at $7.97 billion versus an anticipated $8.05 billion and outpacing adjusted earnings per share with $3.20 compared to analysts’ predictions of $2.98.
Shares surged more than 8% in after-hours trading.
Johnson & Johnson also shared earnings Tuesday, reporting that its earnings beat analysts’ estimates but shares fell 1.45% as the company cut its full-year sales and profit outlook.
IBM stock fell 5.28% as it also cut its forecast for cash flow, despite posting an earnings beat.