US STOCKS-Wall Street climbs as earnings optimism overshadows rising yields

The Nasdaq rallied nearly 2% on Tuesday, leading Wall Street's main indexes higher as investors focused on positive earnings reports while setting aside concerns about aggressive policy steps to stem inflation.

The Nasdaq rallied nearly 2% on Tuesday, leading Wall Street's main indexes higher as investors focused on positive earnings reports while setting aside concerns about aggressive policy steps to stem inflation. Shares of megacap companies, including Microsoft Corp , Apple Inc and Amazon.com Inc, rose between 0.9% and 3.0%, even as Treasury yields extended a recent surge.

Johnson & Johnson rose 3.5% to a record high as the drugmaker's quarterly profit exceeded market expectations and it raised its dividend payout. "People came into this earning season excessively pessimistic - overweight in cash and commodity, panic selling out of bonds and tech," said Thomas Hayes, chairman at Great Hill Capital in New York.

"But guidance is not coming down as much as people anticipated. We're going to see more of it throughout this earnings season, particularly in the tech sector, which everyone could not be more pessimistic about moving into earnings season." Of the 49 companies in the S&P 500 index that have reported quarterly earnings so far, 79.6% have topped profit estimates, as per Refintiv data. Typically, 66% beat estimates.

Streaming giant Netflix Inc and IT firm International Business Machines Corp, set to report after the closing bell, gained 3.7% and 1.6%, respectively. St. Louis Federal Reserve Bank President James Bullard on Monday repeated his case for increasing the rates to 3.5% by the end of the year to slow a 40-year-high inflation. He also said he did not rule out a 75 basis points rate hike.

Stocks appeared to brush aside the comments, but bonds fell, pushing the 30-year yield to 3% for the first time since April 2019 as investors adjusted for faster interest rate hikes this year. At 12:14 p.m. ET, the Dow Jones Industrial Average was up 439.20 points, or 1.28%, at 34,850.89, the S&P 500 was up 58.47 points, or 1.33%, at 4,450.16, and the Nasdaq Composite was up 247.88 points, or 1.86%, at 13,580.24.

Ten of the 11 major S&P subsectors were higher. Energy stocks fell 0.8% as oil prices tumbled 5% after the International Monetary Fund cut its growth forecasts for the global economy and warned of higher inflation. Halliburton Co declined 1% even as the oilfield services firm posted an 85% rise in first-quarter adjusted profit as a rally in crude prices boosted demand for its services and equipment.

Twitter Inc slipped 0.8%. More private-equity firms have expressed interest in participating in a deal for the micro-blogging site, according to reports. Travelers Cos Inc fell 5.1% even as the property and casualty insurer posted a better-than-expected quarterly profit.

Advancing issues outnumbered decliners by a 2.06-to-1 ratio on the NYSE and a 3.01-to-1 ratio on the Nasdaq. The S&P index recorded 30 new 52-week highs and 11 new lows, while the Nasdaq recorded 56 new highs and 322 new lows.