U.S. stocks end higher on strong company earnings

STORY: U.S. stocks surged on Tuesday as more companies reported better-than-expected earnings, offering some respite to investors worried about higher inflation denting corporate results.

The Dow gained nearly two and a half percent. The S&P 500 added two and three quarters of a percent, and the Nasdaq finished up more than 3%.

Adam Coons, portfolio manager at Winthrop Capital Management, said the real test would be earnings on deck from megacap tech companies.

"A lot of people thought the banks would kind of lead the charge for the market and in some ways they have but what we're really looking at is, going forward, is big tech that that mega-cap technology sector has has been which really drug the market down this year. And a lot of that is forward guidance and expectations of what's going to come. So that's what we're looking at. The big names, your Microsoft, your Alphabet, Apple. To see what's coming out of those companies, I think, is really going to be the tell for how the market is going to act this second half of the year."

Shares of Microsoft, Alphabet and Apple posted big gains on Tuesday and all are set to report earnings next week.

Shares of Halliburton rose after the oilfield services provider posted a 41% increase in quarterly adjusted profit.

Johnson & Johnson shares declined, reversing earlier gains, after the healthcare giant reported profit and sales that exceeded expectations but cut its earnings outlook for the year due to a rising U.S. dollar.

The strong dollar also weighed on shares of IBM, which beat quarterly revenue expectations but warned the hit from currency headwinds for the year could be about $3.5 billion.

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