US stocks close on upbeat data ahead of tech earnings reports

The rebound follows a more than 3 percent drop a day earlier, underscoring heightened market volatility days before the US presidential election.

United States stocks closed higher on Thursday, with the technology heavyweights rallying ahead of major earnings reports and upbeat domestic economic data calming investor jitters about surging coronavirus cases.

The rebound came after a more than 3 percent slide a day earlier in Wall Street’s main indexes, underscoring heightened market volatility ahead of the presidential election next week and growing fears of another COVID slowdown.

The Dow Jones Industrial Average rose 139.03 points or 0.52 percent to finish the session at 26,658.98.

The S&P 500 – a gauge for the health of US retirement and college savings reports – gained 1.20 percent while the tech-heavy Nasdaq Composite Index added 1.64 percent.

Stocks rallied as investors anticipated strong results from a lineup of the biggest names in the US corporate universe – Apple Inc, Amazon.com Inc, Alphabet Inc and Facebook Inc – due after market close.

“The earnings season so far has resulted in significant positive earnings surprises,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We think that’s helping to fuel today’s rally in anticipation of positive surprises from these companies.”

Tech companies have seen demand surge for their products and services from people stuck at home during the pandemic. A better-than-expected earnings report from Pinterest Inc, which forecast a rebound in advertising spending, helped spur the rally. Shares of the image-sharing company soared more than 28 percent.

The NYSE FANG+TM Index jumped 3.2 percent. Communication services, materials and technology rose the most among major S&P sectors.

Sentiment also got a boost from data showing the US economy grew at a record pace in the third quarter after the government poured out more than $3 trillion of pandemic aid. A separate report showed weekly unemployment claims fell last week.

“It’s positive data, but it’s a little bit backward-looking because you have COVID-19 cases on the rise again which doesn’t really send a strong signal about the fourth quarter,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management in New York.

The CBOE volatility index surged to a 15-week high this week due to lack of fiscal stimulus, while the White House coronavirus task force urged for aggressive measures to curb the pandemic.

Democratic challenger Joe Biden holds a comfortable lead over President Donald Trump in national polls, but the race in battleground states that will likely decide the election are tighter than the national surveys.

Coach owner Tapestry climbed 4 percent as it beat quarterly profit estimates and forecast growth for the year as demand for luxury handbags and apparel rebounded in China from pandemic lows.