U.S. stocks mostly advanced on Tuesday, with the S&P 500 and Nasdaq Composite halting their worst three-day rout since 2011, with the energy sector slammed along with the price of oil, as investors considered earnings from banking powerhouses JPMorgan Chase, Citigroup and Wells Fargo and waiting to hear from Intel.
"Today was a transition day, it was important to show some sort of a gain after a strong start. But what you're seeing is fear about the Fed going away at the end of the month, this is a lot about trying to see true valuations of these stocks," said JJ Kinahan, chief strategist at TD Ameritrade.
JPMorgan Chase edged lower after reporting earnings that missed and revenue that beat estimates; Citigroup rose after topping expectations on both the top and bottom lines; Wells Fargo declined after matching profit estimates and reporting revenue just above expectations. Johnson & Johnson erased gains that came after with the diversified health-care company's earnings.
"After the unrelenting selling pressure we've seen over the last few weeks, in the near term we are very oversold. It's hard to know how long a bounce from an oversold position can hold," said Art Hogan, chief market strategist at Wunderlich Securities.
"Earnings are coming in reasonably good, but the market is a forward-looking mechanism, so it is really a reaction to the outlook for fourth-quarter earnings and 2015," said Jim Russell, senior equity strategist for US Bank Wealth Management.
"We're hopeful that this is more than a technical bounce, as of the open, the S&P 500 was 6.9 percent from its high, but it feels like more than that because of the violence of the decline and the volatility associated with it," said Russell.
After ending at its highest level since June 2012 the prior day, the CBOE Volatility Index (VIX), a measure of investor uncertainty, on Tuesday fell 7.5 percent to 23.79.
"If in fact we have a deflationary global slowdown trade, it's only exacerbated by weak data out of Germany," added Hogan of a gauge of investor confidence in Germany, which fell to a two-year low in October. The German government also cut is 2014 economic-growth outlook for the euro-zone's largest economy.