Publications
Partners
New York - US stocks climbed on Tuesday in a broad rally, recovering from sharp declines sparked by a "bogus" Associated Press tweet about explosions at the White House.
A false tweet by hackers of two explosions at the White House that injured US President Barack Obama provoked a steep drop in stocks, before they quickly recovered minutes later.
Thomson Reuters data showed the benchmark S&P 500 index fell 14.6 points, in the space of 3 minutes when the tweet hit the market. With the S&P 500 valued at about $14.6 trillion at the time of the false tweet, the plunge briefly wiped out $136.5bn of the index's value.
"If that was true that had happened, that's a justified selloff, but because people suffer from information overload, people tend to overreact and don't wait to substantiate things - that is the downside to a 24-7 news cycle," said Jason Weisberg, managing director of Seaport Securities Corp in New York.
"You want instantaneous pricing, you want all the advantages of the technology, well then, you have to live by the negatives that the speed and expediency provide."
The move was a reminder of the May 6, 2010, tumble in markets now known as the "flash crash," when the Dow industrials dropped more than 600 points, eventually piling up a loss of about 1,000 points, in a few minutes before recovering.
Stocks had seen a solid advance before the tweet, lifted by a host of strong corporate earnings, including Travelers Cos, Netflix and Coach.
After the closing bell, Apple climbed 4.9% to $425.95 after the iPad and iPhone maker reported second-quarter earnings and unveiled plans to double the amount of capital it returns to shareholders. During the regular session, Apple closed at $406.13, up 1.9% for the day.
The Dow Jones industrial average rose 152.29 points, to close at 14,719.46. The Standard & Poor's 500 Index gained 16.28 points, to finish at 1,578.78. The Nasdaq Composite Index advanced 35.78 points, to end at 3,269.33.
Netflix Inc shares jumped 24.4% to $216.99 while Coach shot up 9.8% to $55.55. They were the S&P 500's two biggest percentage gainers.
Shares of Netflix shot higher after the movie streaming service reported earnings that beat expectations and strong subscriber growth. Coach stock leaped after the upscale leather goods maker and retailer reported higher-than-expected quarterly sales.
Travelers Cos helped lift the Dow, up 2.1% at $86.35 after the insurer posted earnings that topped expectations and boosted its dividend.
Earnings season has been largely positive, with more than 68.9% of S&P 500 companies that have reported results so far beating expectations, according to Thomson Reuters data. Since 1994, 63% have surpassed estimates on average, while the beat rate is 67% for the past four quarters.
"We are encouraged to see the market focusing on fundamentals, because we had been in a period where the macro trade was pretty much driving things - whatever the global macro event was or political event was seemed to be affecting the movement of the markets for a period of time," said Paul Mangus, head of equity research and strategy at Wells Fargo Private Bank in Charlotte, North Carolina.
The benchmark S&P 500 index has risen 2.4% over the past three sessions.
Analysts see earnings growth of 2.3% this quarter, up from expectations of 1.5% at the start of the month.
Housing stocks ranked among the best performers, after Barclays raised its rating on the homebuilding sector to "positive" from "neutral." The sector also got a lift from encouraging housing data, with US new home sales up 1.5% in March.
The PHLX housing sector index rose 3.8%, led by a 9.3% gain in Toll Brothers to $34.13. Barclays raised its recommendation on Toll Brothers' stock to an "overweight" rating as part of the firm's broader sector call.
Volume was active, with about 6.39 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly above the daily average of 6.38 billion. Advancing stocks outnumbered declining ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, more than three stocks rose for every one that fell.
