Almost 79 percent of S&P 500 companies that have reported so far have beatenearnings estimates, while 62 percent have surpassed revenue projections, according to data compiled by Bloomberg. Profit for S&P 500 companies rose 6.3 percent in the third quarter and sales increased 4.1 percent, analysts predicted.

“The corporate sector seems to be alive and kicking,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “This is good news especially after the breakdown of confidence we had earlier this month. The question is whether the market has to rely on central bank policy alone to drive asset prices higher. Certainly the earnings season so far shows there is some support from the corporate sector too.”

Data today indicated orders for durable goods unexpectedly dropped in September for a second month as demand for machinery and computers slumped. Bookings for goods meant to last at least three years decreased 1.3 percent after falling 18.3 percent in August. The median forecast of 83 economists surveyed by Bloomberg called for a 0.5 percent gain.

Consumer confidence advanced in October as Americans enjoyed further price drops at the gas pump and the job market continued to improve. The Conference Board’s index climbed to 94.5 this month, the highest since October 2007, from a September reading of 89 that was stronger than initially estimated.

“The consumer confidence index was really big as everybody’s been concerned about what the pullback in the stock market means for holiday spending,” John De Clue, the Minneapolis-based chief investment officer for the Private Client Reserve of US Bank, said in a phone interview. “When you approach this time of year you’re looking at a wall of money to be spent or not spent, and it looks like now the fall in gasoline prices is going to offset that.”

All 10 of the main groups in the S&P 500 advanced, with energy stocks rising 2.3 percent to lead gains. Transocean Ltd. and Newfield Exploration Co. added at least 4.3 percent.

David Fuller's view

Corporate earnings are mostly encouraging, yet the lower durable goods figures for the second consecutive month confirm that the US economy is far from overheating.  Lower gasoline prices are a big boost for consumer confidence ahead of the important Christmas season.  This year’s three black swans – tit for tat sanctions against Russia, Isil’s advance in Iraq, and Ebola - are mostly off the front pages. Importantly, monetary policy remains extremely accommodative despite the imminent end of QE. 

Led by Transports, Wall Street’s main indices such as the S&P 500, Nasdaq 100, Nasdaq Composite and DJIA have bounced strongly from the region of their 200-day MAs, despite bigger corrections than they have seen for some time.  Even the Russell 2000 has managed to record a downside failure.  Short-term indicators are now overbought and concerns over global GDP growth remain.  

Further comments on stock markets are in the Audio.