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Post: Market Snapshot: Dow up 600 points as focus turns to earnings after wild week for markets

U.S. stocks rallied on Monday as investors awaited a deluge of corporate earnings and after a U-turn on tax policy by the U.K. government helped soothe global bond markets.

What’s happening
  • The Dow Jones Industrial Average

    was up 601 points, or 2%, at 30,236 after rising 677 points at its session high.

  • The S&P 500

    was up 99 points, or 2.8%, at 3,682.

  • The Nasdaq Composite jumped 348 points, or 3.4%, to 10,669.

Stocks experienced extremely volatile trade last week, with major indexes reversing steep losses Thursday to end sharply higher only to tumble againon Friday. The Dow saw a 1.2% weekly fall, while the S&P 500 shed 1.6% and the Nasdaq Composite lost 3.1%.

What’s driving markets

Financial-market sentiment improved on Monday as the result of better-than-expected earnings from Bank of America Corp.
as well as developments in the U.K. under new finance minister Jeremy Hunt.

Hunt, the new Chancellor of the Exchequer, abandoned the majority of the £45 billion ($51 billion) in previously announced unfunded tax cuts that were blamed for sparking a bout of global market volatility and stoking fears of a broader breakdown of the global financial system. That contributed to a sharp pullback on yields on the 30-year gilt BX:TMBMKGB-30Y, or U.K. equivalent of Treasurys, which fell 48 basis points to 4.37%.


through 10-year Treasury yields

declined in sympathy with U.K. rates.

See: U.K. chancellor throws out almost all major tax cuts from the mini-budget and pares back energy support

“There’s a combination of things giving investors some relief in terms of what’s going on,” said Jon Maier, chief investment officer of New York-based Global X ETFs, which oversaw $47 billion of assets as of August. One of them is the action taken by Britain’s new finance minister and the other is U.S. corporate earnings “which have not been as bad as expected,” he said via phone.

Earnings season is set to pick up steam after a round of earnings from major Wall Street banks on Friday. Investors welcomed results Monday from Bank of America, while Goldman Sachs Group Inc. GS is due to report Tuesday.

In Monday’s only major U.S. economic release, the New York Fed’s Empire State manufacturing index had its third straight negative reading, declining 7.6 points to negative 9.1 in October, compared with expectations for a reading of negative 5.

Meanwhile, last week’s volatile activity, particularly Thursday’s historic intraday turnaround in Dow industrials, had analysts pondering whether stocks are exhibiting behavior associated with market bottoms.

“One way to know if markets are overstretched is if negative news fails to sink equity markets further. What we saw last Thursday was different, namely a deep pool of bargain hunters,” said Sebastien Galy, senior macro strategist at Nordea Asset Management, in a note.

“What we saw was likely extreme bearish positioning being reduced. This is an encouraging sign, but it is not yet a new dawn — we continue to prefer cautious positions,” Galy said.

Companies in focus

— Steve Goldstein contributed to this article.

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