Investing.com - The Dow returned to positive territory for the year Thursday, recouping losses from a rout the prior day, led by surge in tech as bargain-hunting investors piled into beaten-up stocks on the back of reassuring earnings.
The Dow Jones Industrial Average rose about 1.63%. The S&P 500 rose 1.86%, while the Nasdaq Composite rose 2.95%. Strong gains for the Dow and Nasdaq saw both indexes escape correction territory, defined as a 10% decline from the most recent peak.
The major averages were rescued from correction territory as investors viewed the rout from a day earlier as a buying opportunity, with tech attracting the bulk of investor dollars following bullish earnings from Microsoft (NASDAQ:MSFT) and Twitter (NYSE:TWTR).
Microsoft posted earnings and revenue Wednesday after the close that handily beat analyst expectations on both the top and bottom lines, sending its shares soaring nearly 6%. Twitter rallied more than 15% after comfortably exceeding consensus revenue and earnings estimates.
Elsewhere on the earnings front, Tesla (NASDAQ:TSLA) swung to a surprise third-quarter profit, though some on Wall Street put the brakes on optimism, questioning whether this is "as good as it gets" for the electric automaker.
Tesla's exposure to China tariffs on imported components and its offering of lower-priced vehicles would likely compress margins in the fourth quarter, Goldman Sachs said. "We question if this is not as good as it gets (for Tesla) from a near-term upside surprise for shares."
Chipmaker Advanced Micro Devices (NASDAQ:AMD), however, tempered optimism on earnings after it guided fourth-quarter revenues below consensus estimates. Its shares slumped about 15%.
Still, chipmakers managed a decent showing for the day, led by a rally in Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA) and Micron Technology (NASDAQ:MU). The SPDR S&P Semiconductor (NYSE:XSD) gained more than 2%, clawing back some losses from a day earlier, when the sector suffered its worst slump since Nov. 2018.
Energy also contributed to the rebound in the broader average as oil prices continued to pare early-week losses on renewed hopes that OPEC will cut supplies before the year is out.
The spring-loaded rebound on Wall Street comes as analysts asserted the recent selloff was overdone as the outlook for earnings and U.S. economic growth remained favourable.
"The nearly 10% decline in U.S. stocks over the last month appears excessive relative to the risks," said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
Market participants will get a first look at the pace of U.S. economic growth on Friday, with the released of preliminary third-quarter GDP data.
In corporate news, Take-Two Interactive Software (NASDAQ:TTWO) rose nearly 9% ahead of the release of its popular Western shoot-em-up "Red Dead Redemption II," due Friday, expected to be a big hit among gamers. Analysts didn’t hold back in their remarks about the importance of the game to Take-Two's growth.
"People have been anticipating this launch for years," Cowen analyst Doug Creutz told the WSJ. "If you're looking for what's the net growth driver for the company, you are looking at this game."
Top S&P 500 Gainers and Losers Today:
Twitter (NYSE:TWTR), Xilinx (NASDAQ:XLNX) and International Paper (NYSE:IP) were among the top S&P 500 gainers for the session.
Align Technology (NASDAQ:ALGN), Advanced Micro Devices (NASDAQ:AMD) and Equifax (NYSE:EFX) were among the worst S&P 500 performers of the session.