U.S. stocks rose on Tuesday as investors digested another batch of corporate earnings and awaited key inflation data later this week.
The Dow Jones Industrial Average gained 371.65 points, or about 1.06%, to 35,462.78. The S&P 500 gained 0.84% to 4,521.54, while the Nasdaq Composite added 1.28% to 14,194.45.
Corporate earnings were driving stock moves on Tuesday. Harley-Davidson jumped more than 15% after the company reported a surprise profit for the fourth quarter. Amgen and Chegg rose 7.8% and nearly 16%, respectively, following their quarterly updates.
Shares of American Express rose 3.3% and JPMorgan gained 1.9%, boosting the Dow.
"The S&P 500 reversed losses as Wall Street rotated into materials, technology, and financial stocks," Edward Moya, senior market analyst at Oanda, said in a note to clients. "Now that we are both over the hump with earnings season and investors are prepared for another hot inflation report, the ongoing rotation trade will likely continue. Today, traders are finding value in tech and embracing financials as global bond yields steadily increase."
It was a broad rally for stocks on Tuesday, with gainers in the S&P 500 outnumbering decliners by more than 2 to 1. The small-cap Russell 2000 rose more than 1.6%.
Wall Street has been on edge watching how the Federal Reserve will react to the intensifying price pressures, with many investors eyeing Thursday's consumer price index data release as a key event for markets this week. The inflation data is expected to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, which would be the highest in almost 40 years.
Treasury yields hit fresh pandemic-era highs Monday and rose again Tuesday. At its highest, the benchmark 10-year Treasury note yielded 1.97% on Tuesday, a level not seen since November 2019.
"It's reasonable to expect that stocks are going to be in a holding pattern before Thursday's CPI release. I think it is encouraging we are seeing the market absorb the rise in long-term yields pretty well," said Angelo Kourkafas, investment strategist at Edward Jones.
"At this point it is a tug-of-war between solid corporate and economic fundamentals and monetary policy tightening," he added.
On the downside, Pfizer shares slid 2.8% after the drugmaker's fourth-quarter revenue came in lower than Wall Street analysts expected. Pfizer's full-year earnings guidance also disappointed.
As of Tuesday morning, about 300 S&P 500 components have reported, with 77% exceeding earnings estimates and 75% topping revenue expectations, according to FactSet. However, the strong results have not been enough to dig the market out of the hole created by January's slide, and weak forward guidance may be part of what is holding back a rebound.
"Despite a solid beat this quarter, guidance weakened significantly. ... Guidance is also sparser than usual – we note only 76 instances of EPS guidance issuance in [January], slightly below last Jan and the lowest of any Jan," Bank of America's Savita Subramanian said in a note to clients.
CVS Health, GlaxoSmithKline and Toyota are among the companies slated to report earnings later this week.
Elsewhere, Peloton shares rose 25% after the interactive fitness company said it will slash 2,800 jobs in a restructuring effort that will see CEO John Foley step down and transition to executive chair. The move followed a surge of 20.9% on Monday following reports the company could be a takeover target.
Tuesday's market moves clawed back Monday's losses for the S&P 500 and Nasdaq. The three major market averages are now positive for the week.