By Amy Caren Daniel
(Reuters) - U.S. stocks rose on Thursday, as strong earnings from Microsoft helped Nasdaq-listed companies stage a rebound from the tech-heavy index's worst decline since 2011 in the previous session.
Traders said investors also went bargain hunting after the market rout on Wednesday erased the Dow and the S&P 500's gain for the year and confirmed a correction for the Nasdaq.
Microsoft jumped 5.4 percent after it beat consensus estimates for revenue and profit. That, and gains in chipmakers, lifted technology stocks 2.85 percent, the most among the 11 major S&P sectors.
Ford Motor, which is struggling with sales in China, rose 7.6 percent as its earnings report raised hopes for a strong finish to the year, bolstering sentiment in the consumer discretionary sector.
The latest round of strong reports came from a variety of companies, including Visa, Whirlpool, Twitter and American Airlines, and offered some relief after the earnings season began on a tepid note and then geared lower on sluggish outlook from manufacturers and chipmakers.
That fanned worries over the impact of tariffs and China's slowdown on profits, and, along with concerns ranging from rising costs and bond yields to Italy's budget and upcoming U.S. mid-term elections, sparked a rout on Wall Street on Wednesday.
"The earnings season is going to be key for markets to come out of the correction phase - that and any positive developments in the U.S. on trade relations," said Luke Tilley, chief economist at Wilmington Trust in Delaware.
"We're starting off today on very positive note, and that is indicative of investors looking for deals within the companies and sectors that had shown large declines yesterday."
The selloff lowered the S&P's valuation to a two-and-a-half year low of 15.3 times earning expectations for the next 12 months, from 15.8 on Wednesday, according to Refinitiv data.
At 11:49 a.m. EDT the Dow Jones Industrial Average was up 359.12 points, or 1.46 percent, at 24,942.54, the S&P 500 was up 43.64 points, or 1.64 percent, at 2,699.74 and the Nasdaq Composite was up 178.66 points, or 2.51 percent, at 7,287.06.
Results from S&P 500 companies have pushed up third-quarter profit growth estimates to 23.6 percent from 21.8 percent in the last 10 days. But dour forecasts have pulled down fourth-quarter growth estimates to 19.4 percent from 19.9 percent, Refinitiv data shows.
Advanced Micro Devices' weak forecast sent its stock tumbling 14.1 percent. But, the Philadelphia Semiconductor index rose 1.67 percent, helped by Xilinx's 13.8 percent jump on its strong quarterly report.
Intel gained 3.6 percent ahead of its quarterly report due after the closing bell. Alphabet and Amazon, also due to report in after hours, were up 4.3 percent and 5.1 percent, respectively.
Advancing issues outnumbered decliners by a 2.62-to-1 ratio on the NYSE and a 3.07-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 34 new lows, while the Nasdaq recorded 10 new highs and 159 new lows.
(Reporting by Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)
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