US Markets

Dow surges more than 200 points, closes back above 27,000 as JP Morgan surges on earnings

The market will pivot on question of 2020 recession, strategist says
The market will pivot on question of 2020 recession, strategist says

Stocks closed sharply higher on Tuesday as the corporate earnings season got off to a strong start.

The Dow Jones Industrial Average rose 237.44 points, or 0.9% to close at 27,024.80. Tuesday marked the Dow's first close above 27,000 since Sept. 19.

The S&P 500 gained 1% to close at 2,995.68 while the Nasdaq Composite advanced 1.2% to 8,148.71. The S&P 500 was about 1% away from reaching an all-time high.

"The early reporters must not have gotten the memo from market bears stating that we are in an earnings recession," said Nick Raich, CEO of The Earnings Scout. Through Tuesday morning, 34 S&P 500 components had reported third-quarter numbers. Of those companies 29 have topped analyst expectations, data from The Earnings Scout shows.

J.P. Morgan Chase shares jumped 3% to a record after its third-quarter numbers topped analyst expectations. The company's revenue also hit a record, boosted by home and auto loans along with credit cards.

UnitedHealth, another Dow member, posted a quarterly profit that topped analyst expectations by 13 cents per share. The company's results got a boost from growing pharmacy benefits. UnitedHealth also hiked its full-year earnings guidance. UnitedHealth shares climbed 8.2% to notch its biggest one-day gain in over a decade.

JP Morgan stands out amid deluge of bank earnings —Three experts on what it means for markets
JP Morgan stands out amid deluge of bank earnings —Three experts on what it means for markets

Johnson & Johnson, meanwhile, saw its third-quarter numbers lifted by higher sales of cancer and other prescription drugs. The numbers sent the stock up by 1.6%.

"It's a great promising start to the cycle, but as we get more into the multinational, manufacturers and tech companies, I think we're going to see choppy waters," said Ryan Nauman, market strategist at Informa Financial Intelligence. "We're going to end up beating expectations, but it wouldn't surprise me if this earnings recession continues for another cycle."

Expectations for the corporate earnings season overall were downbeat entering Tuesday. Analysts polled by FactSet expect S&P 500 earnings to fall by 4.6% on a year-over-year basis.

Ed Yardeni, president and chief investment strategist at Yardeni Research, thinks these expectations may be too low. Analysts "tend to overshoot on the pessimistic side in the weeks before earnings seasons. That, in turn, means that there is often an earnings 'hook' to the upside as actual results beat expectations."

United Airlines is among the companies set to report after the bell Tuesday. Netflix, IBM and Bank of America are all scheduled to report Wednesday.

Wall Street also got a boost from positive news on the Brexit front. Bloomberg News reported that negotiations between the UK and the European Union were leading closer to a draft Brexit deal. Rates around the world shot up on the report, while U.S. stocks reached their session highs. EU negotiator Michel Barnier also said a deal was possible this week.

Tuesday's moves come after a subdued trading session on Monday, with investors grappling with new worries on the U.S. China trade front. CNBC learned through a source that China wants to have additional talks before signing phase one of a trade deal with the U.S.

—CNBC's Silvia Amaro contributed to this report.