US stocks regain ground on earnings

US stocks surged more than 2 percent on Tuesday after upbeat earnings reports from major companies, along with solid economic data, as equities rebounded from a sharp selloff.

Wall Street's three major indices recorded their biggest one-day percentage gains since March. The small-cap Russell 2000 made its best move in nearly two years.

The Dow Jones Industrial Average rose 547.87 points, or 2.17 percent, to 25,798.42; the S&P 500 gained 59.13 points, or 2.15 percent, to 2,809.92; and the Nasdaq Composite added 214.75 points, or 2.89 percent, to 7,645.49.

Technology, which sold off heavily in the recent pullback, led the gains as all 11 major sectors were positive.

Investors are expecting another strong quarter of corporate profits, which could help alleviate concerns over global trade tensions, particularly between the US and China, and rising bond yields. Third-quarter earnings for S&P 500 companies are expected to have climbed 21.8 percent, according to I/B/E/S data from Refinitiv.

"The corporate profits have certainly been the biggest prop for this market, and so a lot of weight is going to be given to how those corporate profits come out," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "We are early in the season, but so far so good, especially today."

The gains marked a partial recovery from Wall Street's recent sharp pullback from record levels. The S&P 500 last week posted its largest weekly drop since March.

"It's mostly an oversold bounce," Willie Delwiche, investment strategist at Baird in Milwaukee, said of Tuesday's gains.

The technology sector gained 3 percent while healthcare rose 2.9 percent. Those two groups have led the S&P 500's advance this year.

Goldman Sachs and Morgan Stanley reported better-than-expected quarterly profits, helped by strength in stock trading and equity underwriting, wrapping up a strong quarter for the big US banks. Goldman shares rose 3 percent, while Morgan Stanley shares gained 5.7 percent.

In healthcare, shares of Johnson & Johnson rose 1.9 percent and UnitedHealth Group gained 4.7 percent after their quarterly reports.

Adobe shares advanced 9.5 percent following the software company's analyst meeting.

Walmart shares rose 2.1 percent as its CEO urged investors to revise their view of the company's business.

Shares of Netflix jumped postclose following the streaming video company's report.

US industrial production increased for a fourth straight month in September, boosted by gains in manufacturing and mining output, while other data showed job openings hit a record high in August.

"The third quarter, which is now underway, would be the first sign if you're looking for a smoking gun for either tariffs or tightening conditions," said Jurrien Timmer, director of global macro at Fidelity Investments.

REUTERS-BLOOMBERG