S&P 500 hits 2-week high as investors bet third quarter earnings will help market recover

On the floor of the NYSE in New York, Traders work on the floor.

The S&P 500's surge over 1% on Tuesday adds to two weeks of strong gains as investors speculate that third-quarter earnings reports could help pull the market out of its downturn.

Apple, Tesla, and other tech-related stocks drove Wall Street higher, with Microsoft and Alphabet adding 1% ahead of their quarterly reports after the bell, as investors bet that a strong start to the third quarter earnings season will continue.

The S&P 500 is up about 8% from its closing low on October 12, and a close to its current level would be the index's third largest gain from a low in 2022's bear market. Tuesday's gains put the S&P 500 about 10% over its intra-day low on October 13. S&P 500 recovers from bear market lows, https: graphics.reuters. The S&P 500's record high and its most recent low have passed over 280 days since the USA-STOCKS BEAR xmvjkgrogpr chart.png It took 33 days for the S&P 500 to fall from its record high in 2020 to its lowest point as global markets reeled due to the disruptions caused by the coronaviruses. S&P 500 bear markets, https: fingfx.thomsonreuters. com gfx mkt zgpobwkmzvd Pasted 20 image 201666721196292.png This year's selloff has dragged the S&P 500's forward earnings valuation down from a historically high 21 to about 15, just below its 10 year average of 17 according to Refinitiv data.

Earnings expectations have sunk this year, with analysts saying that S&P 500 companies will increase their earnings per share by 6.8% in 2022. That compares to an estimate of 9.5% in July. The forward PE of S&P 500 dips below the 10 year average, https: fingfx.thomsonreuters. The third quarter earnings season has been better than expected, with nearly three quarters of the 129 companies in the S&P 500 exceeding earnings per share estimates, according to Refinitiv data.

Several sectors this month are showing signs of a recovery after this year's rout. Graphic: Every S&P 500 stock performance in October, https: fingfx.thomsonreuters. com gfx mkt zjvqjwjxpx Pasted 20 image 201666721787433. Png With Amazon, Microsoft, Tesla, Nvidia, and other tech-related heavyweights still badly bruised in 2022, the S&P 500 growth index's performance is slightly less than the value index, which reflects smaller losses in sectors ranging from industrials to consumer staples. Graphic: Growth loses value, https: graphics.reuters.