U.S. stocks climbed on Tuesday, with the Nasdaq Composite bouncing back from its worst three-day hit since 2011, as investors sought recently hammered social media and Internet shares and braced for quarterly earnings.
"After a few days of some pretty sharp selling my guess is you have some people coming in and testing these levels. You had a pretty severe correction in pockets of the technology sector and biotech, probably due to the run up that has occurred, so we have some good, old-fashioned profit taking, and you have some good, old-fashioned nervousness about what first-quarter earnings are going to look like," said Matthew Kaufler, portfolio manager at Federated Investors.
"The market has been kind of dealing with a correction since January; after a really good end to last year, stocks might have been a little ahead of themselves. So stocks that did well the last nine months of last year, that's the profit taking we've seen. Utilities had underperformed, so those yields are more attractive," said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.
"Recently, investors became more nervous, and started to take profits in stocks that had been piling on; some of the larger bellwether tech companies lost some of their froth. Today, techs are number three out of 10, so they are coming back," said Freeman, referring to the S&P 500's 10 major industry groups.
"The retail investor is still looking at these stocks that went so high so fast. They are still trying to buy into these names like Netflix, and even Apple. I still get questions on Apple, is now the time, long after the professionals have moved on to other targets," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
"It's not my style of investing, to buy high and hope to sell higher," she added.
After rising as much as 50 points and falling 65, the Dow Jones Industrial Average rose 10.27 points, or 0.1 percent, to 16,256.14, with Goldman Sachs Group leading declines and Nike pacing gains among its 30 components.
The added 6.92 points, or 0.4 percent, to 1,851.96, with utilities and consumer discretionary faring best and health care and telecommunications the poorest performers and among its 10 major sectors.
The Nasdaq gained 33.23 points, or 0.8 percent, to 4,112.99.
For every share falling, two rose on the New York Stock Exchange, where nearly 749 million shares traded. Composite volume topped 3.7 billion.
The dollar declined against the currencies of major U.S. trading partners and the 10-year Treasury yield used in determining mortgage rates and other consumer loans fell 2 basis points to 2.683 percent.
The unofficial start of the quarterly earnings season begins after Tuesday's close, with aluminum producer Alcoa slated to release earnings.
"We're waiting for earnings to begin in earnest next week; it not only gives you a snapshot of what individual companies are doing, but you can also piece together what the economy at large is doing as the different industries report," said Forrest.
Elliot Spar, market strategist at Stifel, Nicolaus & Company, advised investors to "pass on names where earnings are due in less than 45 days." As he put it: "If you've been beat up by this market correction you certainly don't want to add insult to injury by getting in front of a potential earnings' blow-up."
Gigamon fell sharply after the maker of communications devices cut its first-quarter revenue outlook.
"It's a tense time; markets should react to this," said Forrest of uncertainties in Ukraine, where pro-Moscow protesters reportedly seized weapons in one city and declared a separatist republic in another, moves Kiev described as a Russian-orchestrated plan to justify an invasion.
Russia is "rattling the saber, lining up troops and doing all these aggressive moves; I think they're hoping to be invited in," Forrest said.
The International Monetary Fund on Tuesday forecast the global recovery would gain traction this year as output in wealthier nations picks up, but warned of rising risks in emerging economies.
On Monday, stocks fell for a third session as investors shed high-profile assets that fared well in 2013 in search of better values.
—By CNBC's Kate Gibson
Coming Up This Week:
Earnings: Alcoa, WD-40
4:00 p.m.: Chicago Fed President Charles Evans on a panel at the IMF spring meeting
4:00 p.m.: Fed open meeting on rulemakings for leverage ratios
Earnings: Constellation Brands, Ruby Tuesday, Bed Bath and Beyond, Apogee
10:00 a.m.: Wholesale trade
1:00 p.m.: $21 billion 10-year auction
2:00 p.m.: FOMC minutes
3:30 p.m.: Chicago Fed's Evans on economy and monetary policy
7:30 p.m.: Fed Gov.Daniel Tarullo
Earnings: Family Dollar, Pier 1 Imports, Shaw Communications, Commerce Bancshares, NQ Communications
Monthly chain store sales
8:30 a.m.: Jobless claims
8:30 a.m.: Import prices
8:45 a.m.: IMF Director Christine Lagarde press briefing
11:30 a.m.: Chicago Fed's Evans
1:00 p.m.: $13 billion 30-year auction
2:00 p.m.: Federal budget
Earnings: JP Morgan Chase, Wells Fargo, Fastenal
8:30 a.m.: PPI
9:55 a.m.: Consumer sentiment
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