Stocks Climb, Recovering From a Decline That Wiped Out 2018’s Gains

Stocks rebounded Thursday as strong earnings from major tech companies seemed to ease some of the worries driving a recent wave of selling that had wiped out the market’s gains for the year.

The S&P 500 rose by 1.9 percent, to close at 2,705.57. The rise pulled the stock market back into positive territory for 2018 a day after a turbulent session had erased the last of the year’s gains. Stocks are now up 1.2 percent this year.

The rally Thursday was a rare upward jolt in what has been a rough run for stocks. Investors have dumped shares over the past month, worried about factors that could threaten the economic and profit outlook for 2019, including the trade war with China, the Fed’s plans to keep raising interest rates and the midterm elections.

Those worries have largely outweighed the strong third-quarter sales and profit numbers that companies have reported since earnings season began this month. Thanks to a strong economy and corporate tax cuts, third-quarter profits for S&P 500 companies were on track to be up more than 22 percent, according to an analysis of reported results and projections by the market data firm Refinitiv.

Instead, investors are scanning results for any indication — either in the profit guidance companies offer to analysts or in commentary from executives — that their fears of a rocky time ahead are warranted.

“It’s all about the guidance,” said Maneesh Deshpande, head of U.S. equity strategy at Barclays. “That’s what’s really driving stock movements.”

On Thursday, stock in International Paper rose 10.3 percent after it posted better-than-expected results. Executives said they expected strong sales and profit performance “to continue into the fourth quarter and into 2019.” The chip giant Intel rose 4.5 percent after it raised its profit guidance for next year. Xilinx, a maker of programmable chips used in large data centers, shot up more than 15 percent after it increased full-year profit guidance.

And Xilinx was only the S&P 500’s second-best performer.

Twitter posted its results, with revenue and profit topping forecasts, before the start of trading Thursday, and its stock jumped 15.5 percent. Large tech companies also climbed. Shares of Microsoft, which reported positive results after the close of trading Wednesday, rose 5.8 percent.

The tech-heavy Nasdaq composite index rose nearly 3 percent and is now up 6 percent for the year, but is nonetheless down 9.8 percent from its peak in early September.

If investors were hoping that Thursday’s rise means the latest period of volatility is at an end, they’ll most likely be disappointed.

Amazon, which rose more than 7 percent during the day, promptly tumbled in after-hours trading, after the release of its earnings report, which included a holiday forecast investors found underwhelming. And Google’s parent company, Alphabet, whose shares had risen, dropped sharply when its results likewise disappointed.

As long as investors feel that they don’t have a good sense of what next year will look like, such volatility will almost certainly continue. More market swings could leave it ultimately treading water until conditions become more clear, Deshpande said.

“Until we get through this, we’re just going to have this range-bound and very choppy market,” he said.