By Ankika Biswas and Shashwat Chauhan
(Reuters) -Wall Street reversed course to rise on Tuesday as upbeat earnings and signs of resilience in the U.S. economy buoyed investor sentiment, even as a spike in Treasury yields pressured megacaps.
U.S. retail sales rose 0.7% in September, compared with estimates of a 0.3% rise, while a separate reading showed production at U.S. factories increased more than expected in September.
A rise in U.S. Treasury yields, with the 10-year yields up at 4.813%, pressured megacaps Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN), dragging them down between 0.1% and 0.5%.
"While almost nobody expects a November hike, it's becoming more of a coin toss whether the Fed will raise rates in December," said Sam Stovall, chief investment strategist at CFRA Research.
Federal Reserve Bank of Richmond President Thomas Barkin, however, said anecdotal information points to an economy that's slowing amid a cooling trend in inflation, adding that the U.S. central bank has time to decide on its next interest rate move.
Bank of America (NYSE:BAC) gained 3.1%, boosting the S&P 500 as it joined rivals in earning more from interest payments by its customers, while investment banking and trading fared better than expected.
Goldman Sachs (NYSE:GS) third-quarter profit dropped less than expected as a nascent recovery in dealmaking offset its $864 million writedown related to GreenSky fintech business and investments in real estate. Its shares were down 0.2%.
Nvida dipped 3.5% after the Biden administration said it plans to halt shipments of advanced artificial intelligence chips to China.
The Philadelphia SE Semiconductor index fell 0.3% hitting a near two-week low intraday.
Economy-sensitive energy and materials stocks led gains amongst the major S&P 500 sectors, while information technology lagged behind.
At 12:07 p.m. ET, the Dow Jones Industrial Average was up 112.24 points, or 0.33%, at 34,096.78, the S&P 500 was up 13.49 points, or 0.31%, at 4,387.12, and the Nasdaq Composite was up 11.09 points, or 0.08%, at 13,579.07.
Separately, U.S. President Joe Biden is set to visit Israel on Wednesday, after Washington said Prime Minister Benjamin Netanyahu had agreed to allow humanitarian aid to reach Gazans.
Among individual stocks, defense contractor Lockheed Martin (NYSE:LMT) rose 0.8% after beating third quarter revenue and profit expectations.
Dollar Tree (NASDAQ:DLTR) rose 4.4% after Goldman Sachs upgraded the discount retail chain's shares to "buy" from "neutral".
Cloud computing firm VMware fell 6.2% as traders cited China approval uncertainty for Broadcom (NASDAQ:AVGO)'s $61 billion cash-and-stock deal for the company.
Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE and by a 2.39-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and 6 new lows, while the Nasdaq recorded 39 new highs and 101 new lows.