Stocks up strongly; Dow gains 215

U.S. stock indexes closed with gains Tuesday after an encouraging report on the Chinese economy as well as strong quarterly results from Apple and other big companies.

At the close on Wall Street, the Standard & Poor's 500 index was up 37.27 points, or 1.96 percent, at 1,941.28. The Nasdaq composite gained 103.40 points, or 2.40 percent, to 4,419.48. The Dow Jones industrial average increased 215.14 points, or 1.31 percent, to 16,614.81.

CHINA RELIEF: China's economy expanded by 7.3 percent in the third quarter from a year earlier. Although growth slowed slightly from the previous quarter's 7.5 percent, analysts had expected a more marked slowdown, to 6.9 percent.

China has been a worry spot for investors for many weeks, and has been a key reason why financial markets have been volatile lately. Signs of a slowdown in Europe have also been worrying investors.

"After last week's volatility in the financial markets, the last thing investors needed was bad news out of China," said Neil MacKinnon, global macro strategist at VTB Capital.

IT'S NOT OVER YET: So far this week has been a contrast to last week's turbulence in many ways. Volatility is down, the S&P 500 index is on pace to have its second-best week of the year and the price of crude oil has stopped sliding.

But with a meeting of the Federal Reserve coming up next week, where the bank is expected to end its bond-buying economic stimulus program for good, the growth worries in Europe and China are still top of mind. And with U.S. corporate earnings season underway, the market's direction could change quickly, traders and strategists said.

"Investors are likely to see more volatility, not less. We expected this to happen now that the Fed's quantitative easing program is ending," said Kristina Hooper, head of U.S. investment strategies at Allianz Global Investors. "We are in unusual times, so expect to see more of an outsized reaction in the market."

RISK BACK ON? One notable part of the market investors have been moving back into is smaller, riskier companies. While the S&P 500 and Dow are down 2 percent to 3 percent this month, the Russell 2000 is actually up 0.9 percent for October. "That's an important sign that investors are regaining their confidence," Hooper said.

APPLE SHINES: Apple gained $2.71, or 2.72 percent, to close at $102.47 after its quarterly results easily beat analysts' expectations. The Cupertino, Calif.-based company said it earned $1.42 a share last quarter, helped by strong sales of the latest version of the iPhone.