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Stocks rally on earnings, consumer confidence survey

The facade of the New York Stock Exchange

The facade of the New York Stock Exchange on Wall Street on Oct. 2, 2014. Photo Credit: AP / Richard Drew

Financial markets closed up strongly Tuesday after a key index tracking consumer confidence surged and several big companies reported earnings. Investors are also awaiting news from a two-day U.S. Federal Reserve meeting that ends Wednesday.

At the close on Wall Street, the Dow Jones industrial average was up 187.81 points, or 1.12 percent, at 17,005.75. The Standard & Poor's 500 index climbed 23.42 points, or 1.19 percent, to 1,985.05. The Nasdaq composite gained 78.36 points, or 1.75 percent, to 4,564.29.

CONFIDENCE BOOST: An index of U.S. consumer confidence rebounded strongly in October, hitting a seven-year high as solid job gains raised expectations for economic growth. The rise was enough to offset a weak reading Tuesday in durable goods. Orders to U.S. companies for long-lasting manufactured goods fell for a second month in September, a government report showed. Orders have jumped around in recent months due to moves in the volatile category of aircraft orders.

THE QUOTE: "Confidence is good, and we're predicting Christmas is going to be very strong," said Phil Orlando, chief equity strategist at Federated Investments.

TWITTER TUMBLE: The San Francisco-based company plunged 13 percent after giving a disappointing outlook for the current quarter. The company reported third-quarter revenue late Monday that outpaced expectations, but investors were concerned about revenue for the last three months of the year and user growth. Shares were down 9.84 percent Tuesday by $4.78 to close at $43.78.

HOME WATCH: U.S. home prices grew more slowly in August amid modest sales. The Standard & Poor's/Case-Shiller 20-city home price index rose 5.6 percent in August from 12 months earlier. Home prices were rising at a double-digit pace as recently as last fall.

ALL EYES ON FED: Investors are looking ahead to Wednesday's monthly policy announcement by the Fed's Federal Open Market Committee for a possible timeline for interest rate hikes. The Fed is winding down its $4 trillion bond-buying program, known as quantitative easing. That is heightening concern about whether the U.S. economy is strong enough to sustain growth without that support.

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