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S&P 500 Rises on Strong Earnings for Its Fifth Positive Day in a Row

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U.S. stocks climbed on Tuesday as major companies continued to report strong third-quarter earnings, easing concerns that persistent Covid cases and rising costs would derail corporate America's profit recovery.

The S&P 500 added 0.7% to 4,519.63, rising for a fifth straight day. The Dow Jones Industrial Average gained 198.70 points, or 0.6%, to 35,457.31. The Nasdaq Composite advanced 0.7% to 15,129.09.

The Dow and the S&P 500 now sit less than 1% from their respective all-time highs.

Dow member Travelers saw its shares gain 1.6% after the insurance company's quarterly earnings report topped expectations.

Johnson & Johnson also beat third-quarter earnings expectations by 25 cents per share. The health care stock rallied 2.3%.

Procter & Gamble continued the bullish trend with better-than-expected earnings, but its shares dipped nearly 1.2%. The consumer products giant said it is raising prices to cover rising commodity and freight costs and warned that inflation may continue.

Elsewhere, Walmart shares gained 2.1% after Goldman Sachs added the big-box retailer to its conviction buy list, saying the stock could rally nearly 40%.

So far, 82% of S&P 500 companies that have reported earnings beat expectations, according to FactSet. Taking into account those reports and estimates for those to come, third-quarter profit growth will come in at 30%, according to FactSet.

Other major reports after the bell Tuesday include Netflix and United Airlines.

While reports have been strong, investors are looking for commentary from corporate America about supply chain issues and inflation.

"The financials got earnings season off to another strong start, but let's be honest, COVID and supply chain issues aren't going to impact this group. Now it gets very interesting to see what other industries will have to say about the health of the economic recovery," said Ryan Detrick, chief market strategist at LPL Financial.

Netflix could set the tone for technology earnings this season. Three months ago, the streaming giant forecasted paid net subscriber adds of 3.5 million, while analysts expect about 3.84 million, according to StreetAccount. Analysts are also forecasting fourth-quarter subscriber guidance of 8.5 million, which would be the highest outlook since the first quarter of 2019.

Shares of Netflix have traded lower on six of its last seven earnings releases.

Earnings from United Airlines should give investors a gauge on the travel recovery from the pandemic.

Morgan Stanley's chief U.S. equity strategist Mike Wilson — who has been calling for a correction in the broader market — told clients on Monday that although fundamentals are deteriorating, the market seems to be resilient to a bigger pullback.

"Whether we end up getting this finishing move at the index level this year or not will depend largely on retail participation, the message that 3Q earnings brings from a guidance standpoint, and the path of PMIs into year end," said Wilson.

— with reporting from CNBC's Robert Hum.

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