Stocks close higher for third consecutive day, Nasdaq adds 2.2% ahead of Big Tech earnings

You'd be forgiven for thinking the REITs were technology, at least for a day.

On a percentage basis, real estate investment trusts led today's third straight up move in the S&P 500. Treasurys gave a big lift, as the 10-year yield tumbled to 4.08% from 4.25%. If Treasury yields have peaked, are peaking or will soon peak, the REITs' cost of capital declines, the pressure on cap rates eases and their dividend payouts grow more attractive relative to risk-free Treasurys.

As a result, the S&P 500 Real Estate Index climbed 3.94% Tuesday, trailed by Materials jumping 2.5%, Communication Services gaining of 2.4%, Consumer Discretionary adding 2.3% and Utilities (another inverse rate play) rising 2.0%.

The REITs Index was certainly beaten up enough to deserve a bounce. Its 31% loss in 2022 is exceeded only by Communication Services' 35% plunge.

Inside the REITs Index, ARE +5.6%, +AMT +5.5%, VTR +5.3%, EXR +5.1%, WELL +4.9%, led the move higher.

Where was the S&P 500 Tech Index on Tuesday? Sixth out of 11 major industry groups, and up 1.9%.

— Scott Schnipper

The major indexes ended the day up in a first since last month.

Nasdaq was the biggest gainer, up 2.2% to land at 11,199.12.

The Dow ended up 337.12 points, or nearly 1.1% to close at 31,836.74. The S&P 500 added 1.6%, ending at 3,859.11.

Tuesday marked the first time a three-day rally has occurred since Sept. 12.

— Alex Harring

John Waldron, Goldman Sachs' president and chief operating officer, said inflation is the biggest threat companies are grappling with right now.

"Inflation is the single biggest issue we all have to tackle right now," Waldron said on CNBC's "Power Lunch." He said wage pressure and increasing commodity prices are particularly challenging and could eat into companies' margins.

On the U.S. consumer, Waldron believes Americans are not spending less but they are substituting.

— Yun Li

It's "all eyes" on technology companies this week as giants including Meta, Microsoft, Apple and Amazon are set to report, said Paul Zemsky, chief investment officer of Voya's multi-asset strategies and solutions division.

And he said as long as they meet already-cut expectations, there could be upside.

"If they report anywhere in line with expectations – if they don't disappoint – I think we could see higher prices by the end of the week," he said.

— Alex Harring

William Blair named Microsoft a top pick heading into the software giant's third-quarter earnings results Tuesday after the bell.

Analyst Jason Ader reiterated an outperform rating on Microsoft, and called it a top pick, saying that the software company is well positioned even as enterprise infrastructure spending "becomes less discretionary and more strategic."

"Notwithstanding slowing PC demand, Microsoft is still well aligned with customer prioritization on cloud and security, as well as cost-conscious customers looking to rationalize spending through bundles and suites," Ader wrote in a Tuesday note.

The analyst said that persistent inflation is spurring consumers to consolidate their enterprise software tools for services such as email security and workplace collaboration, which the analyst expects will help Microsoft.

Continued resilience in cloud and security spending, which remains a top priority for customers, would further boost Microsoft's Azure business, according to the note.

"Particularly with the third quarter representing a new fiscal year for Microsoft, VARs noted that these budgets had been replenished healthily, adding continued fuel to the cloud migration fire," read the note.

— Sarah Min

The three major indexes continued trading up, despite cooling off intraday highs, as market enters its most decisive hour.

The Dow added around 270 points, which comes out to about 0.9%. It was trading up more than 300 points at multiple times during the session.

The Nasdaq sat at 1.9% after breaking the 2% threshold earlier in the day. The S&P 500 was just a few points off its intraday high, trading up 1.4%.

— Alex Harring

The European Central Bank is set to meet this week, as the central bankers across the Atlantic try to fight inflation against a worse economic growth backdrop than the U.S.

However, Europe's growth concerns and the recent turmoil in the British bond market doesn't mean that the ECB is about to pivot from its hiking process, said Morgane Delledonne, head of investment strategy for Europe at Global X.

"I think the ECB and the Bank of England are likely to be more aggressive ... or at least as aggressive as the Fed. Going forward, there won't be a rate differential to drive more appreciation of the dollar," Delledonne said, predicting a 0.75 percentage point rate hike from the ECB this week.

The dollar should stabilize and even fall from here, Delledonne said, which could be a boost to U.S. companies that have high exposure to international revenue.

The euro was up 0.8% against the dollar on Tuesday but is still just below parity.

— Jesse Pound

After reducing cycle exposure this year, hedge funds are now considered overweight defensives compares to cyclicals for the first time since October 2021, according to Bank of America.

The shift came as hedge funds moved away from materials, industrials and energy, the bank said in a note to clients Tuesday.

Within the basket of inflation beneficiaries, mutual funds are 34% underweight compared to long-only mutual funds' 15%

— Alex Harring

Advancers handily outpaced decliners Tuesday, with roughly 2,550 New York Stock Exchange-listed names trading higher to just 497 sliding. In other words, about five NYSE-listed names advanced for every decliner.

— Fred Imbert

Equity investors in Elon Musk's purchase of Twitter have received paperwork from his lawyers as part of the closing of the deal, CNBC's David Faber is reporting.

That is another sign that Musk, who has gone back and forth on his commitment to purchasing the social media giant, is on track to close the deal Friday. He agreed to buy the company earlier this month, days before he would have had to go to trial.

Twitter was trading up 2.6% Tuesday. Musk plans to take the company private.

Shares of Tesla, Musk's electric vehicle company, were up 3.6%.

— Alex Harring

The market's current rally is not enough for Nick Baron, senior investment specialist at Brainvest, to tell clients to buy in.

He said others are clinging to individual pieces of data as they come for optimism that the Federal Reserve will change course on rate hikes. But Baron is telling investors to hold steady, saying it's better to miss the first few moves upward than risk buying in only for stocks to plummet.

"I think this rally might be a head-fake," he said, referring to the term used to describe when market performance is quickly followed by a move in the opposite direction.

Baron described the current rally as a "little bear market rally with some optimism that maybe the Fed is going to to pause or slow rate hikes sooner than they actually will."

— Alex Harring

These are the stocks making the biggest headlines midday:

• Xerox: Shares plunged 15% after the seller of print and digital document products and services reported disappointing earnings and cut its full-year revenue guidance. Xerox CEO Steve Bandrowczak said in a release that "profitability remains challenged by persistently high inflation and continued supply chain constraints."
• Logitech: The computer peripherals maker jumped 11.8% after Logitech reiterated its full-year guidance, which was lowered in July. Logitech has struggled with weaker demand after a boom in sales during the height of the pandemic.
• Stem: The stock rose 12.3% after UBS initiated Stem as a buy, saying that AI-driven energy storage company is a market leader that will get a boost from the Inflation Reduction Act.

Check out the full list here.

— Sarah Min

Over the weekend, Tesla announced that it would cut prices of its electric vehicles in China, sending shares lower.

"Tesla's prices in China are now only 0-5% higher than they were a year ago; in the US, by contrast, prices are 11%-27% higher," wrote Toni Sacconaghi of AB Bernstein in a Tuesday note. "We also note Tesla offered price discounts in China at the end of Q3 and has seen order lead times for its cars in China fall dramatically."

The price decreases seem to be driven mostly by competition, according to Sacconaghi. While China's electric vehicle market grew by 126% on the year through September, Tesla's growth in the country is only up 55%. In addition, its share of the Chinese market is only 11%, down from the 18% peak in 2020.

"China's EV market is *much* more competitive than any other country in the world," Sacconaghi said. "We count 106 (non-micro EVs) models in China vs. just 26 models in the US. Notably, new EV models are driving sales growth/share gains, while older EV models (5+ years) are losing share."

Over time, the worry is that upcoming competition in the U.S. could have the same impact to Tesla as the uptick in competitors in China.

"Hypothetically, if Tesla's EV share in the US were to decline from 70% to 50% over the next 3 years, Tesla's growth rate would be impacted by ~3-5% per year," he said. "Moreover, while do see demand creation levers for Tesla in the US (e.g., a lower-priced SR Model Y), most involve a potential trade-off in margins."

Tesla's stock has already underperformed due to waning demand. Going forward, Sacconaghi sees the risk/ reward becoming incrementally favorable, but worries that Tesla "may be increasingly faced with trading off margins for growth as EV competition increases globally."

—Carmen Reinicke

The Dow and Nasdaq continued their upward ascent Tuesday as the markets continued to rally.

The Dow briefly reached 300 points up, which translates to an increase of 0.9%, around 12:20 p.m.

At the same time, the Nasdaq sat slightly above 2%.

— Alex Harring

Tuesday's chilled consumer confidence data from The Conference Board is casting doubt on if or by how much the Fed will raise interest rates after November's meeting, according to Jeffrey Roach, chief economist for LPL Financial.

"The Federal Reserve will likely hike rates by 0.75% in November to cool inflationary pressures but the magnitude at the December meeting is a bit of a wild card since strong consumer demand will keep upward pressure on prices," he said following the release on the data. "The biggest risk is the unknown lagged effects from the Fed's cumulative tightening and the economy may not feel the full effects until next year when recession risks are high."

— Alex Harring

UBS says investors should get in on this under-the-radar energy storage stock expected to rally more than 60% thanks to the Inflation Reduction Act.

Analyst Jon Windham called the stock a "market leader" in the space, noting that the company should experience increased profitability and benefit from IRA tax credits over time.

CNBC Pro subscribers can read the full story behind the call here.

— Samantha Subin

At midday, the S&P 500 and Nasdaq Composite were both up more than 1% — building on the strong gains seen in the previous session. The 30-stock Dow also popped more than 250 points.

— Fred Imbert

Record-level buybacks could be poised to give the volatile stock market a big boost in the fourth quarter

Corporations are already on pace to repurchase more than $1.1 trillion of U.S. stock this year, which will go down as the most ever in the history of the stock market, according to data from Goldman Sachs. There have been signs of heightened activity as of late, the Wall Street firm said.

Companies are trying to take advantage of lower valuations amid 2022′s sell-off, while also rushing to buy back shares to avoid the new 1% excise tax on buybacks in the Inflation Reduction Act of 2022.

"I think it will be heavy quarter, as we see Q1,'23 purchases accelerated into Q4 to avoid the new tax, and cover more employee options," Howard Silverblatt, S&P's senior index analyst, told CNBC.

— Yun Li

Weber stock has jumped more than 35% in the wake of an offer from BDT Capital Partners, the grill maker's largest shareholder with a 48.2% stake.

The trouble is BDT's offer is for $6.25 a share in cash, which is a 24% premium to where Weber shares closed on Monday. With Weber shares trading above the offer price, clearly some investors are betting for a sweeter deal.

Still, as Wells Fargo analyst Chris Carey notes, BDT's offer stated that it wasn't interested in the sale of its stock or "participating in an alternative change of control transaction."

"In our view, this is a 'take it or leave it' type offer and counterbids (from other entities) among other alternatives seem a low probability," Carey said.

The offer, which is being evaluated by a special committee of Weber's board, is far below the $14 per share that Weber debuted at just over a year ago. The company saw strong demand for grills during the Covid-19 pandemic, but sales have slumped since then, forcing the company to suspend dividend payments. Its CEO also departed in July.

Shares of rival Traeger, which makes a wood pellet grill, have also popped on the news. Its stock gained 14.6%.

—Christina Cheddar Berk, Michael Bloom

Ten of the 11 S&P 500 sectors rose Tuesday, boosting the broader market index. Real estate led the way with a 2.7% gain, as rates dipped. Consumer discretionary, communication services, utilities materials and tech also rose more than 1%.

Energy was the lone sector trading lower, dipping about 0.1%.

— Fred Imbert

The Conference Board's Consumer Confidence Index decreased in October, a turn from prior back-to-back monthly gains.

Just 17.5% of consumers said business conditions were "good," down from 20.7% a month ago. Meanwhile, 24% said business conditions were "bad" compared to 20.9% in the prior month.

But more of those surveyed expect short-term business outlook to improve. Though a larger share also expect it to get worse, showing differing views among those surveyed on what will happen in the coming months. (Binary options used to draw comparisons when analyzing survey data do not together make up all response options.)

In the labor market, 45.2% of those surveyed said jobs were "plentiful," which is a decrease from 49.2%. More said jobs were "hard to get," up to 12.7% from 11.1% the prior month.

Similar to business outlook, more consumers expect more jobs in the short term compared to the month before, while more also expect fewer.

And a larger share of consumers both expect their incomes to increase and decrease compared to the month prior, once again showing the contrasting views.

— Alex Harring

Housing prices fell more than expected in August but were still noticeably up compared to a year ago, one index shows.

The S&P CoreLogic Case-Shiller 20-City House Price Index showed a seasonally adjusted drop of 1.3% among the 20 core cities measured in August. That's a bigger decline than the 0.8% expected by Comerica Bank.

The average price for the month in those cities was 13.1% higher than a year ago, which is down from 15.6% when comparing July to the same month a year before.

San Francisco, Seattle and San Diego posted the biggest month-over-month losses, down 4.3%, 3.9% and 2.8%, respectively. The 2.6% difference is the largest in the 35-year history of the index, showing gains are decelerating at a record rate, CNBC's Diana Olick reports.

Even with price increases cooling, cities are still more expensive to live in than they were a year ago. Miami and Tampa saw the greatest increases compared to last year, respectively up 28.6% and 28%. Washington and San Francisco saw the smallest growth in price at 7.4% and 5.6%, respectively.

The correction in housing prices will be a "big drag" on GDP in 2023 and likely cool inflation, according to Bill Adams, Comerica's chief economist. The firm expects real residential investment to fall 18% in 2022 compared to 2022.

"House prices flow through to shelter costs in the inflation indexes that the Fed targets with a lag of several quarters, so the declines in prices in mid-2022 will start to slow inflation in 2023," Adams said. "This is a big reason why financial markets anticipate for short-term interest rates to peak in early 2023, and for the Fed to start pivoting to a less restrictive monetary policy by the second half of next year."

— Alex Harring

At least eight S&P 500 stocks notched fresh highs during Tuesday's trading session, including shares of AutoZone and O'Reilly Auto, which last traded at levels not seen since their respective initial public offerings in 1991 and 1993.

The new S&P 500 highs also included:

• SLB trading at levels not seen since November 2018
• Cigna trading at all-time high levels back to its IPO in 1972
• Humana trading at all-time high levels back to its IPO as Extendicare in 1968, the company was renamed Humana in 1974
• Molina Healthcare trading at all-time highs back to its IPO in June 2003
• Vertex Pharma trading at all-time highs back to its IPO in July 1991

Ball Corp, meanwhile, traded at lows not seen since January 2019.

— Samantha Subin, Chris Hayes

The three main indexes opened higher coming out of early trading Tuesday.

The Dow was down 0.1%, shedding 33 points.

The Nasdaq added 0.6%, while the S&P 500 was up 0.2%.

— Alex Harring

Nasdaq 100 futures have flipped between trading down and up over the course of pre-market trading, signaling what market observers expect to be an important week for the tech-heavy Nasdaq composite with some of its biggest names reporting.

Futures turned up as high as 0.25% shortly after 9:10 a.m. Tuesday. That follows a period of seesawing, as the futures were trading down before turning slightly up around 7:30 a.m., only to come back into the red shortly after.

In regular trading Monday, the Nasdaq composite began the day negative before switching to positive and ending up 0.9%.

Alphabet and Microsoft are set to report after the bell Tuesday. Meta, Amazon and Apple follow later in the week.

— Alex Harring

Wall Street is growing increasingly pessimistic of Google and Meta as investors look to a big week for tech earnings.

KeyBanc lowered its price targets for Google-parent Alphabet and Meta, which owns Facebook and Instagram, by 4% and 10%, respectively. These new price targets still present upsides of 17% and 24% for the pair.

It said Alphabet was seeing search decelerating, cooling brand strength for YouTube and slowing growth in deals within its could platform. The firm said it remained cautious though encouraged about Meta's Reels, though it expects the company to see impacts from currency headwinds and its Europe business.

Though still more bullish on Meta than KeyBanc, Jefferies also lowered its price target by about 11%, but that still presents an upside of about 54%.

The firm expects weak third-quarter results and fourth-quarter outlook, in line with competitor Snap. But it said the company is making positive movement on share repurchasing, cutting investments in its Reality Lab and making Reels profitable, all of which could help the stock down the road.

Alphabet is down 29.2% this year and is expected to report earnings after the bell Tuesday. Meta, which is down 61.4% so far this year, is set to report earnings Wednesday.

— Alex Harring

Companies reporting earnings before the bell are triggering reactionary moves in early trading Tuesday.

Those stocks include:

• JetBlue: The airline is down 4.5% after it fell short of bottom-line estimates despite matching revenue consensus and reporting a quarterly profit.
• Xerox: Shares of the office equipment maker dropped 8.2% after reporting per-share earnings at less than half of what was expected. The company cited increasing costs and continued supply chain costs as reasons for its performance.
• 3M: The manufacturer lost 2.9% after reporting that its revenue fell short of expectations and cutting full-year guidance due to the surging dollar and rising costs. However, the company did beat on anticipated earnings per share.
• UPS: Shares rallied 4.4% on a mixed earnings report that showed the company beat anticipated earnings and expanded profit margins through increased prices. But the company still saw revenue come in below expectations.

See the full list of pre-market movers here.

— Peter Schacknow, Alex Harring

There's a positive setup for Apple shares into the tech giant's fiscal fourth quarter earnings, which come after the bell Thursday, according to JPMorgan.

"We don't believe fundamentals are immune to the macro backdrop, but we see the combination of a resilient iPhone product cycle in relation to revenues rather than volumes, as well as margins, to deliver results that demonstrate resiliency above the low-bar of investor expectations at this time," analyst Samik Chatterjee wrote in a note Monday.

He's recommending options traders buy a Nov. 25 $157.5/$165 strike call spread as "an attractive, cost-effective and risk-adjusted implementation for equity upside" heading into earnings.

Evercore ISI is also bullish on Apple, believing the company is well-positioned to deliver in-line to likely better-than-consensus results, as well as potentially show modest upside for next quarter's guidance.

"We continue to expect strong iPhone results despite concerns around iPhone production cuts given mix shift towards higher-end models and aggressive carrier promotions," analyst Amit Daryanani wrote in a note Monday. "Gross-margins could be the surprise upside driver here given the uplift
in component availability and the compression in memory pricing."

Apple is down more than 15% year to date.

— Michelle Fox

Coca-Cola shares rose 3% before the bell after the company reported beating estimates for earnings per share and revenue.

The maker of brands such as Coke, Dasani and Fanta outperformed on revenue by about 7% at 69 cents per share compared to the expected 64 cents. The company also posted a revenue of $11.05 billion, up about 5% from the $10.52 expected.

Coca-Cola said the company expects inflation and foreign exchange to continue negatively impacting the company's expenses and revenue. The company does not plan to release 2023 full-year guidance until next year, but did say comparable earnings per share growth should come in between 6% and 7%, a slight increase from the prior 5% to 6%. Outlook for organic revenue growth was also upped to between 14% and 15% from 12% to 13%.

— Alex Harring

General Motors shares popped 4% after the automaker posted its latest quarterly results. The company earned $2.25 per share, beating a Refinitiv forecast of $1.88 per share. GM's revenue did come in slightly below expectations at $41.89 billion.

Adjusted EBIT for GM's North America, International and Financial businesses all cam in above expectations.

"During the third quarter, GM once again delivered strong results, including record third-quarter revenue and double-digit EBIT-adjusted margins," CEO Mary Barra said in a letter to shareholders. "We're delivering on our commitments and affirming our full-year guidance despite a challenging environment because demand continues to be strong for GM products and we are actively managing the headwinds we face."

— Fred Imbert

UPS posted earnings per share of $2.99 for the previous quarter, beating a Refinitiv forecast of $2.84. The results sent the stock up more than 2% in the premarket.

The company also reaffirmed its full-year guidance.

"The macro environment is very dynamic, but we are on track to achieving our 2022 financial targets by executing our strategy and controlling what we can control," CEO Carol Tomé said in a statement.

— Fred Imbert

Polaris shares fell more than 3% even after the snowmobile maker posted a quarterly profit that beat expectations.

The company earned $3.25 per share on revenue of $2.34 billion. Analysts expected earnings per share of $2.83 on revenue of $2.2 billion.

However, Polaris said its gross margin came in at 23.9%, slightly below a StreetAccount estimate of 24.2%.

— Fred Imbert

Shares of General Electric fell more than 3% after the industrial giant posted its latest quarterly results. The company earned 35 cents per share, adjusted, though it's not clear if that's comparable to a Refinitiv forecast of 46 cents per share. GE's revenue of $19.08 billion did top a consensus estimate of $18.62 billion.

— Fred Imbert

Jefferies analyst Stephanie Moore upgraded shares of Waste Management, noting that the stock has what it takes to weather a potential recession.

"Our Buy rating is based on our belief that as the largest waste player in North America, WM will be a significant beneficiary of the favorable industry pricing environment," she wrote. "Further, we think the Street is underappreciating the upside potential to earnings from its margin improvement initiatives, as well as its sustainability investments."

CNBC Pro subscribers can read the full story here.

— Sam Subin

Many investors spend their time trying to time the market, waiting for a precise bottom before they buy.

But that strategy may lead investors to miss out on a decent payoff over the next year, said Leuthold Group's Jim Paulsen said.

"To me, I would say if you buy somewhere around here, you're probably going to feel pretty good over the next 12 months," the chief investment strategist said.

Investors over the last few trading days have bet that the Federal Reserve is likely nearing a slowdown in its pace of tightening, pushing the major averages higher.

Some shifts in the market do indicate that a bottom may have hit. Defensive areas are underperforming while more aggressive investments like cyclicals and small caps have shifted into leadership positions. But Paulsen cautions timing the bottom.

"I don't worry too much about trying to pick bottoms," he said.

— Samantha Subin

A pivotal week for big technology kicks off Tuesday with earnings reports from Alphabet and Microsoft. How they perform will likely trigger where the market moves from here.

"No one wants to aggressively buy big tech stocks until we hear this week's big earnings from Apple, Alphabet, and Amazon," wrote Oanda's Ed Moya in a note to clients Monday. "Investors are getting more confident that inflation will soften as the consumer rethinks massive purchases."

So far, the bar's been set pretty low for many companies this season given the pullback in earnings estimates over the last few months and technology stocks have slumped off their highs as investors fear growth-focused areas.

While the sector has struggled so far this year, a big move higher and sustainable rally for the overall market is dependent on this area reemerging as the "leadership," said Truist's Keith Lerner. Information technology and communication services, which account for many of these names, make up roughly 26% and 8% of the S&P 500's weight, respectively.

"For the overall market, in order to see a strong rally, you need [tech] to participate because it's such a big sector," Lerner said. "I think the burden of proof is on these companies to produce because they, in general, have not this year."

Robust earnings that surprise to the upside could facilitate this shift, Lerner said, noting that the sector hasn't offered the typical earnings momentum it's generated in previous years that convinced investors to buy tech.

As interest rates remain elevated, Lerner nonetheless favors energy and industrial stocks, specifically aerospace and defense companies given current geopolitical concerns.

— Samantha Subin

A busy earnings week continued after the bell on Monday with reports from software company Qualtrics International and Discover Financial.

Shares of Qualtrics surged more than 11% in postmarket trading following a beat on the top and bottom lines for the recent quarter. The software company and maker of tools utilized for surveys and customer feedback also lifted its guidance for the full year.

Meanwhile, Discover Financial's stock dipped 1.5% in extended trading after it missed Wall Street's earnings expectations for the recent quarter. The financial services company also said it expects operating expenses to increase more than expected for the year.

Check out the full list of stocks making moves in after-hours trading here.

— Samantha Subin

Stock futures opened slightly lower on Monday as investors awaited the latest batch of technology earnings.

Futures tied to the Dow Jones Industrial Average inched 34 points, or 0.11% lower, while S&P 500 and Nasdaq 100 futures dipped 0.11% and 0.17%, respectively.

— Samantha Subin