By Lewis Krauskopf
NEW YORK (Reuters) - Major U.S. stock indexes jumped more than 1 percent on Tuesday, helped by strong gains for chip and transport stocks as investors took advantage of cheaper prices following a steep recent pullback for equities.
All 11 major S&P 500 sectors ended higher a day after a volatile session that pushed the benchmark S&P 500 lower and close to confirming its second correction of 2018.
“You have had such a pounding here in the month of October that at some point you would expect some bouncing to begin and hold,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
“You are starting to see maybe people wading into the waters with, 'Time to buy some of these stocks.' You saw that yesterday, but obviously it just didn’t hold," Carlson said.
The Dow Jones Industrial Average rose 431.72 points, or 1.77 percent, to 24,874.64, the S&P 500 gained 41.38 points, or 1.57 percent, to 2,682.63 and the Nasdaq Composite added 111.36 points, or 1.58 percent, to 7,161.65.
The Philadelphia semiconductor index jumped 4.2 percent, its biggest one-day percentage gain since March. Intel (NASDAQ:INTC) surged 5.2 percent and gave the biggest single-stock boost to the S&P 500.
Chip stocks also gained following a brokerage upgrade of Nvidia shares and a better-than-expected report from chip-gear maker KLA-Tencor (NASDAQ:KLAC). Nvidia shares jumped 9.4 percent and KLA-Tencor shares rose 7.6 percent.
Chip stocks had dropped broadly on Monday, as renewed concerns about U.S.-China trade tensions sparked declines.
The Dow Jones Transport Average jumped 2.8 percent, its biggest one-day rise in about a year. A drop in oil prices may have boosted closely watched transport shares, Carlson said.
Market volatility has spiked in recent weeks, stemming from higher U.S. interest rates and worries about economic growth peaking and trade tensions. Investors also may be increasingly nervous about uncertainty surrounding U.S. congressional elections, now just a week away.
The S&P is on pace for its biggest monthly percentage drop in more than eight years.
S&P 500 companies are on pace to have posted a 25.3 percent rise in third-quarter earnings with more than half of the constituents having reported, according to I/B/E/S data from Refinitiv.
Despite the big overall profit increase, some high-profile companies have issued disappointing reports. On Tuesday, General Electric (NYSE:GE) shares tumbled 8.8 percent after the conglomerate drastically reduced its dividend and said it faced a deeper accounting probe.
“As earnings roll in, most of them have been OK," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
"It’s just that some of the misses have been of the most well-known companies and it has kind of overshadowed a little bit of the better earnings of smaller companies or less iconic companies.”
In other earnings news, Coca-Cola (NYSE:KO) Co's shares rose 2.5 percent after the beverage maker's quarterly revenue and profit topped Wall Street expectations.
Under Armour Inc's shares surged 24.7 percent after the sportswear maker's upbeat quarterly earnings and full-year profit forecast.
Advancing issues outnumbered declining ones on the NYSE by a 2.26-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and 25 new lows; the Nasdaq Composite recorded 18 new highs and 202 new lows.
About 9.6 billion shares changed hands in U.S. exchanges, above the 8.6 billion daily average over the last 20 sessions.