Thursday's afternoon trade: strong results, bargain-hunting help Wall Street bounce back

US stocks gained on Thursday, as Microsoft's strong earnings helped Nasdaq-listed companies stage a rebound from the tech-heavy index's worst decline since 2011 in the previous session. Traders said investors also went bargain hunting after the market rout on Wednesday that erased the Dow and the S&P 500's gain for the year and confirmed a correction for the Nasdaq.
Microsoft jumped 5.3 percent after it beat consensus estimates for revenue and profit. That, along with gains in chipmakers, helped technology stocks rise 2.89 percent. The latest round of upbeat results came from a wide range of companies, including Visa, Whirlpool, Twitter and American Airlines, and offered relief after the earnings season began on a tepid note and then geared lower on sluggish outlook from manufacturers and chipmakers.
That fanned worries over the impact of tariffs and China's slowdown on corporate profits and, along with concerns ranging from rising costs, bond yields to Italy's budget and upcoming US mid-term elections, sparked a rout on Wednesday. But the selloff also made stocks cheaper. The S&P's valuation fell to a two-and-a-half year low of 15.3 times profit estimates for the next 12 months from 15.8, according to Refinitiv data. "It's a little bit of a bargain-hunting bounce back. I don't think the markets have fully gotten over the fear factor," said Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management in San Francisco.
At 13:00 p.m. EDT the Dow Jones Industrial Average was up 364.94 points, or 1.48 percent, at 24,948.36, the S&P 500 was up 45.81 points, or 1.72 percent, at 2,701.91 and the Nasdaq Composite was up 177.75 points, or 2.50 percent, at 7,286.15. Results from S&P 500 companies have pushed up third-quarter profit growth estimates to 23.6 percent from 21.8 percent in the last 10 days. But dour forecasts have pulled down fourth-quarter growth estimates to 19.4 percent from 19.9 percent, Refinitiv data shows.