Stocks surge, recovering much of last week’s losses

U.S. stocks rocketed to their biggest gain in six months Tuesday following strong earnings from major financial and health care companies as well as encouraging reports on the economy. The Dow Jones Industrial Average jumped 547 points.

Morgan Stanley, Goldman Sachs and UnitedHealth led a parade of companies that reported profits for the third quarter that surpassed analysts' expectations. Technology companies also jumped after taking steep losses during the market's rout last week.

The Standard & Poor's 500 index jumped 59.13 points, or 2.1 percent, its largest gain since March 26, and finished at 2,809.92. Stocks have bounced around over the last three days, and the S&P 500 is down 4.1 from its record high on Sept. 20. The Dow gained 547.87 points, or 2.2 percent, to 25,798.42.

The NASDAQ composite climbed 214.75 points, or 2.9 percent, to 7,645.49 as technology companies reversed some of their outsize losses from the last few days. The Russell 2000 index of smaller-company stocks had its biggest rally in almost two years as it surged 43.74 points, or 2.8 percent, to 1,596.84.

Even with the big gains, major indexes are still broadly lower for the month following a two-day rout last week that erased nearly 1,400 points from the Dow. But all of the major indexes are well into positive territory for the year.

Investors were encouraged by some good news on the economy. The Federal Reserve said output by U.S. factories, mines and utilities climbed in September despite the effects of Hurricane Florence, and the Labor Department said U.S. employers posted the most jobs in two decades in August while hiring continued to increase.

Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute, said stocks jumped because the industrial production report suggests inflation isn't speeding up, and that investors took that as a sign the Fed won't accelerate the pace of its interest rate increases.

"Anything that helps the market think that the Fed won't make a mistake is good," Wren said.