Dow closes up more than 300 points as strong earnings boost stocks in choppy market

The major averages closed near the middle of their trading range for the day, with the Dow up more than 300 points. The Nasdaq closed up nearly 1% after fading twice during the day.

— Jesse Pound

The Dow is on track to gain roughly 1,000 points for the first two days of this week, but many investment professionals are skeptical that this rally has staying power.

Alli McCartney, UBS Private Wealth Management, said on "Closing Bell" that it is not time yet for investors to jump back in to the market.

"Great that we have some buyers stepping in. I think getting some flow and some sustainability, or at least some support, in this market is really important and we will take it. But we do not think we are out of the woods yet," McCartney said.

— Jesse Pound

Shares of Apple declined and briefly turned negative after a report from The Information that the tech giant was cutting production of its new iPhone 14 Plus.

The move by Apple, the biggest U.S. stock, brought the major averages back near their lows of the day, though they have since recovered some of that ground.

—Jesse Pound

The Fed is widely expected to hike by another three-quarters of a percentage point next month, but the central bank may be reaching its limit for dictating long-term interest rates, according to The Leuthold Group's Jim Paulsen.

"There is considerable precedent in past tightening cycles for the Fed to be shut down by the bond market "blinking" first. The Fed may soon attempt to raise the funds rate to 4%, 4.5%, or even 5%. But at some point, longer-term bonds may simply stop rising and refuse to follow the Fed's lead," Paulsen wrote in a note to clients on Tuesday.

The 10-year Treasury yield has traded above 4% in recent days, reaching its highest levels in more than a decade. With growing concern about a recession in 2023, it may be close to a ceiling, Paulsen said.

"Each time the Fed further tightens monetary policy, recession fears are elevated relative to inflation fears. Ultimately, as the Fed becomes more and more aggressive, recession becomes a bigger worry than inflation, and bond buyers begin outnumbering bond sellers—that is, the bond market blinks," Paulsen added.

— Jesse Pound

Fears about a potential recession are growing, with Goldman Sachs CEO David Solomon being the latest high profile figure to warn about the possibility. That has investors are looking for sectors that may have historically proven to be resilient during a downturn.

It turns out, alcohol consumption has remained steady during recessions, a Goldman Sachs analysis found. However, a separate report from Bernstein found that during times of abnormally high unemployment per capita consumption fell 1%.

Whether there is no drop in consumption, or just a slight one, there are some nuances that may have an impact on some companies' bottom lines. That includes any shift in the current trend of consumers trading up to higher-end cocktails and beer. Instead, they may downgrade to lower priced options, shifting within the spirits category or switching from spirits to beer.

To find out more about the current trends in place, how they may be impacted by a recession and what names top analysts' buy lists, read the CNBC Pro story here.

— Michelle Fox

A number of important stock market indicators are at key levels right now, according to Randy Frederick, managing director of trading and derivatives at Charles Schwab.

The S&P 500, the Dow Jones Industrial Average and the Dow Jones Transportation average are trading at their 200-week moving average. In addition, the yield on the 10-year U.S. Treasury has hit 4%, another important level.

"Throw in the kickoff to Q3 earnings season and it seems that the only logical outlook for this week is 'Breakout,'" Frederick said.

Holding at these levels could be a good sign going forward.

"If the SPX can stay above its 200-week SMA and 10-year yields remain below 4.0%, this will likely boost bullish sentiment, but the inverse is true as well," he said.

—Carmen Reinicke

It's not a question of whether or not to buy, it's about what area you should focus on, says Josh Brown

Investors in this market should not necessarily be thinking about whether it is a good time to buy, said Ritholtz Wealth Management co-founder and CEO Josh Brown.

"We are not really in a 'yes or no, do I buy?' It is, 'What are the areas I should be focused on, even if it is not the overall bottom for the S&P 500,'" he said on CNBC's "Halftime Report."

Brown believes investors should pay less attention to valuation and think more about price and sentiment.

"There are large areas of the market that did not violate the June lows into the overall market September lows," Brown said.

They may not have the most trading gains off the low, but the fact that they aren't selling off with the rest of the market may indicate those invested in the spaces are either ignoring the overall market picture or trying to get ahead of it, he said.

That includes health care, some select financials, and energy.

Elsewhere in the market, Brown is not bullish on Netflix into its earnings report after the close, since it typically doesn't rally afterwards, he said. He owns the stock and thinks a lot of bad news is already baked into the name. Right now, he is considering adding shares of Domino's Pizza as a potential hedge. He thinks it is "way too cheap, fundamentally."

— Michelle Fox

The market appears to be bumping along a bottom and could soon make a big rally, according to Janney technical strategist Dan Wantrobski.

"Our work continues to point toward progress being made on the bottoming front for this correction cycle. We believe price and sentiment components are very close, while the time component implies there is likely to be more volatility experienced at some point in 2023," Wantrobski said in a note to clients on Tuesday.

While many on Wall Street are skeptical of this rally, Wantrobski says the upside in the coming weeks could be substantial.

"These recent buying surges (last week & yesterday) combined with oversold conditions and deep bearish sentiment still imply that the markets are coiled for more upside ahead. We believe the benchmark S&P 500 can quite easily slingshot back toward the 3800-4000 range in short order, with the potential to test toward the 4200+ zone by year-end," Wantrobski said.

— Jesse Pound, Michael Bloom

• Hasbro — Shares of the toy company dipped 2.3% after the company reported third-quarter earnings that missed expectations. CEO Chris Cocks blamed "increasing price sensitivity" among consumers and inventory gluts.
• Carnival Corporation — Shares of the cruise company jumped more than 12% after one of Carnival's subsidiaries began an offering of $1.25 billion of senior priority notes due 2028. The company plans to use the net proceeds of the offering to make principal payments on debt and for other general corporate expenses, according to a regulatory filing.
• Goldman Sachs — Goldman Sachs rallied 3% after beating third-quarter analyst expectations for profit and revenue on better-than-expected trading results. The company also announced a corporate reorganization that combines the firm's four main divisions into three.

Read the full story here.

— Tanaya Macheel

Art Cashin, the UBS director of floor operations, said Tuesday that short-covering during last Thursday's big intraday swing may have set the stage for a solid multi-week rally. Cashin said that this could prove to be an "intermediate-term bottom" for the market.

"I think this is a bounce in a bear market, but it could last a couple of weeks," Cashin said on "Squawk on the Street." He said that he was originally expecting this trading action to take place later in the month.

However, Cashin did point out that the market had a strong start in the first week of October, only to give back most of those gains in the following days.

"It's important that we hold on. We shouldn't let this rally fade in the next two days. I think if we can stay for a couple of more days, we may be seeing not the turning point, but an important point," he said.

The major averages are still on track to post a second positive day, but it has been wobbly since Cashin's remarks. In fact, the Nasdaq Composite briefly turned negative in midday trading.

— Jesse Pound

The market has seen an unusually high number of "all or nothing days" in recent weeks, according to Bespoke Investment Group.

The firm said in a note on Tuesday that the number of days where the S&P 500 saw at least 400 stocks either rise or fall is nearing record levels on a five-week trailing basis.

"Given that you can count the number of prior periods when the rolling five-week total exceeded ten on one hand, this is not a situation you see very often. Through yesterday's close, the rolling total reached 12, which is just three shy of the record high of 15 seen on 3/26/20 just three days after the Covid crash low," the note said.

Tuesday is on track to add to that trend. In midday trading, there were 430 S&P 500 stocks positive for the session, according to FactSet.

— Jesse Pound

Shares of Microsoft and semiconductor names gave back their earlier gains Tuesday, knocking the major averages off their session highs.

Microsoft was last down 0.2% after rising as much as 2.7%. Intel, AMD and Nvidia were also lower after trading higher to start the day.

— Fred Imbert

Enviva's shares were up 4.1% during day trading after Raymond James called the company's alternative to coal misunderstood.

The firm said Enviva's wood pellets are a more socially and environmentally responsible way to make energy. It also said the stock has an upside of more than 50%.

CNBC Pro subscribers can read the full story here.

— Alex Harring

The market averages continued to give up ground as Treasury yields push higher.

The 10-year Treasury yield climbed to 4.054% after trading as low as 3.961% earlier in the day. The 2-year Treasury yield also reversed its early losses and is now little changed on the day at 4.454%.

— Jesse Pound

The stock market has given back some of its initial gains, and the three major averages are now up about 1.5% each.

Moderna is the biggest loser in the Nasdaq 100, falling more than 2%. Intel is the worst performer in the Dow, sliding about 1.5%.

— Jesse Pound

Deutsche Bank is still a believer in Microsoft ahead of the tech giant's earnings.

In a note Tuesday, analyst Brian Zelnick said he doesn't anticipate any big surprises when Microsoft reports next Tuesday. The commercial and enterprise segments haven't gotten materially worse and continue to hold up, and the weakening consumer backdrop is well understood by investors, he wrote.

"We continue to rest our Buy rating on the high-quality nature of Microsoft's business, supported by multiple secular tailwinds, and a belief that in a weakening IT spending environment it is likely to outperform peers that don't benefit from similar wallet share consolidation opportunities within a vast and entrenched installed base," Zelnick said.

He's lowered his fiscal year 23 earnings-per-share to $9.83 from $10.05. His $315 price target implies nearly 33% upside from Monday's close.

— Michelle Fox

The Treasury market could be giving a boost to stocks on Tuesday, as the 10-year U.S. Treasury yield has fallen back below the 4% level.

Yields are lower across most of the the curve, with the 2-year yield falling four basis points to 4.416%.

Price moves opposite of yields, and one basis point equals 0.01 percentage points.

— Jesse Pound

Home builder sentiment dropped in October, hitting 38 on the National Association of Homebuilder's housing market index.

The new reading is down from 46 hit in September and is the lowest level the index has hit since August 2012.

The reading is a signal of negative sentiment as it is below 50 on the index. In addition, the index has fallen to half of what it was six months ago as the homebuilding industry has dealt with the rapid rise in interest rates. That's pushed up mortgage prices, making buyers less likely to purchase homes.

This is the first year since 2011 that housing starts will fall.

—Carmen Reinicke

Dan Loeb's Third Point has a stake in Colgate-Palmolive, CNBC's David Faber reported.

Loeb pointed to Hill's Pet Nutrition, a pet food company under Colgate, as potentially having value if spun off.

The move comes as pet ownership around the world rises, with owners willing to spend for what they see as better-quality food. Hill's is part of the fastest growing unit within Colgate and has been pitched as backed by "science," catering to the more health-conscious pet owner.

The stock was trading up nearly 3% Tuesday.

— Alex Harring, Yun Li

Stocks opened sharply higher, with the S&P 500 and Nasdaq rising more than 2% each and the Dow adding 600 points. The Dow has now gained more than 1,000 points this week.

— Jesse Pound

Investors responded at market open to companies that reported earnings before the bell Tuesday.

Goldman Sachs shot up more than 4% at open, coming off third-quarter results that topped expectations. The bank pointed to better-than-expected trading as a driver of its performance for the quarter. It was trading up before the bell on the news.

Toy maker Hasbro opened up .8% after whipsawing in pre-market trading. The company missed earnings per share expectations by 10 cents for its third quarter, coming in at $1.42. It met revenue expectations, though revenue was down 15% compared to the same quarter a year ago.

CEO Chris Cocks blamed inflation and high inventory levels. He said the company plans to sell through inventory, while focusing on fewer, more noteworthy brands, as it looks to the fourth quarter.

While Johnson & Johnson beat expectations for earnings per share, the company narrowed its full-year guidance. The multinational pointed to the surging dollar, which is biting into its international bottom line. The stock opened down just under 1%.

— Alex Harring

The first major wave of earnings this quarter has featured better than expected results, and Barclays said Tuesday that Amazon can continue that trend when it reports earnings next week.

"Our proprietary data shows a 'couple point beat' on NA retail revenue, and we think international is holding up relatively well through 3Q," analyst Ross Sandler wrote in a note to clients. "We think AMZN has one of the better revenue and margin trajectories among mega-cap tech the next few quarters. Sentiment remains muted (understandably so) on deceleration growth concerns in retail and AWS, but we think AMZN can continue to deliver."

Barclays has an overweight rating and $200 per share price target on Amazon. The stock was up 3.8% to $118 per share in premarket trading.

Amazon is set to report its third quarter results on Oct. 27.

— Jesse Pound, Michael Bloom

Activist hedge fund Starboard Value LP has taken a large stake in Salesforce, reports CNBC's David Faber. The total dollar amount of the position is unknown.

Shares of Salesforce jumped more than 7% in premarket trading.

Starboard founder Jeff Smith will be CNBC at 10:15 a.m. ET to discuss the move.

— Jesse Pound

Positive earnings results and an oversold market may have created ripe conditions for a market rebound, but Chris Senyek of Wolfe Research said in a note to clients that the recent volatility should give investors pause.

"Despite the potential for a near-term 'risk on' rally, we remain bearish from now to year end. In our view, price volatility in risk asset markets is a 'directionless' concept. In other words, big price swings in both directions are only indicative of a highly uncertain environment. Further, we believe that most 'high vol' environments reflect a growing risk of 'fat tailed' events," Senyek said.

Based on premarket action, the Nasdaq Composite could be on track for its fourth straight session of moving 2% or more in either direction.

— Jesse Pound, Michael Bloom

Goldman Sachs may have pleased investors with its third-quarter results, but CEO David Solomon sees trouble on the horizon for the U.S. economy.

The bank chief told CNBC that there is a "good chance" the U.S. economy falls into a recession and that business leaders should act with that in mind.

"I think it's a time to be cautious, and I think that if you're running a risk-based business, it's a time to think more cautiously about your risk box, your risk appetite," Solomon said during a live interview on CNBC's "Squawk Box."

— Jesse Pound

Target is up 2.8% in extended trading after Jefferies upgraded the retailer in a Tuesday note to clients.

Analyst Analyst Corey Tarlowe said the bulk of challenges stemming from freight costs and inventory gluts are now behind it. He added that the retailer has also been leaning into partnerships that will help drive sales going forward.

CNBC Pro subscribers can read more about the call here.

— Alex Harring

Goldman Sachs topped analyst expectations for profit and revenue on better-than-expected trading results for the third quarter.

Earnings-per-share were $8.25, versus a $7.69 estimate from Refinitiv. Revenue came in at $11.98 billion versus the $11.41 billion expected by analysts.

Shares in the premaket popped more than 2% on the news.

CEO David Solomon also announced a reorganization of the business, combining the firm's four main divisions into three.

— Michelle Fox and Hugh Son

Johnson & Johnson shares are up 1.6% before the bell after the company reported expectation-beating third-quarter earnings.

Earnings per share came to $2.55, beating expectations of around $2.47.

Reported sales grew 1.9% to $23.791 billion from $23.338 billion a year ago. Net earnings increased 21.6% to $4.458 billion from %3.667 billion.

The multinational, known for a range of products ranging from household goods to a Covid-19 vaccine, is outperforming the broader market, down about 2.6% so far this year.

— Alex Harring

Smaller companies have had a difficult year. In fact, according to Peter Oppenheimer, Goldman Sachs' chief global equity strategist, they've had the worst year-to-date since the turn of the century.

However, he argued that the segment is starting to look "inexpensive," and named several global stocks with stable growth and good profitability.

Pro subscribers can read more here.

— Zavier Ong

Rob Luna, chief investment strategist at Surevest, says his firm has "started to witness individual stocks outperforming and showing signs of already bottoming."

He predicts when the S&P 500's long-term move downward could turn, and names the stocks he thinks look attractive right now.

CNBC Pro subscribers can read more here.

— Weizhen Tan

During Monday's rally, all three major indices climbed and the Nasdaq posted its best day since July. It also closed more than 34% from its 52-week high, while the S&P 500 and the Dow Jones Industrial Average were 23% and 18% from their 52-week highs, respectively.

All sectors also closed more than 10% from their 52-week highs, led by communication services that was up more than 40% from the key level. Tech, consumer discretionary and real estate were all more than 32% from 52-week highs, while financials and materials were more than 22% from 52-week highs.

—Carmen Reinicke

Third quarter earnings season continues Tuesday, with a slew of companies reporting results before and after the bell. Here's what companies are on deck for tomorrow.

Before the bell:

• Goldman Sachs
• Hasbro
• Albertsons
• Johnson & Johnson

After the bell:

• Netflix
• United Airlines

—Carmen Reinicke

Stock futures were higher Monday evening after stocks staged a rally in the regular trading session.

Futures tied to the Dow Jones Industrial average gained 161 points or 0.53%. S&P 500 futures jumped 0.58% and Nasdaq 100 futures climbed 0.59%.

—Carmen Reinicke