Stocks rally back

Wall Street recovers after recent battering as investors eye Wal-Mart's earnings, Goldman Sachs' outlook, declining oil prices; dollar falls again versus euro.

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By Alexandra Twin, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, as Wal-Mart's earnings report, upbeat comments from Goldman Sachs' CEO and falling oil prices gave investors a reason to return after a tough period that left the Dow below 13,000 for the first time this fall.

The Dow Jones industrial average (Charts) added over 170 points nearly 3 hours into the session. The S&P 500 (Charts) index added 1.3 percent and the Nasdaq composite (Charts) added 1.9 percent.

Although the day's news was positive, it perhaps was not as positive as the stock market reaction would suggest, said Fred Dickson, chief market strategist at D.A. Davidson.

"I think we had an oversold market due for a bounce," Dickson said. "Wal-Mart's news wasn't terrific enough to cause a major reversal, but it gave the bulls some support."

He said that drop in oil prices also brought out some bargain hunters. Also helping Wall Street: a rally in the bank sector, sparked by comments from Goldman Sachs CEO Lloyd Blankfein, who said that the company won't take any further significant charges related to the subprime mortgage mess.

"There are little wisps of signs of stabilization in the most distressed credit markets, and you also have the Blankfein comments," Dickson said.

Wal-Mart Stores (Charts, Fortune 500) reported higher third-quarter earnings that topped estimates and lifted its full-year earnings forecast to a range that is higher than analysts' current forecasts. The world's largest retailer also issued a somewhat cautious outlook for the fourth quarter, which includes the crucial holiday period.

However, investors focused on the positive, sending shares 6.5 percent higher.

Wal-Mart was one of 26 Dow components rising, reflecting the broad scope of the advance. The remaining four Dow components slid, including fellow retailer Home Depot (Charts, Fortune 500), which reported lower quarterly earnings that missed estimates and said that fiscal-year profit will drop from a year earlier.

Strength in the financial sector also propped up the advance.

At a Merrill Lynch conference, the CEO of Goldman Sachs said the company won't be taking any more significant writedowns related to subprime exposure. That sent Goldman (Charts, Fortune 500) shares up 6 percent.

However at the same conference, BlackRock (Charts) CEO Larry Fink said that the worst for the credit markets is not yet over. Fink is reportedly a top candidate to become chief executive of Merrill Lynch following Stanley O'Neal's resignation last month.

Bank of America (Charts, Fortune 500) shares also rose, even after the company said it would take $3 billion in writedowns related to its bad debt bets.

Banks have taken more than $46 billion in charges this year related to the mortgage market fallout, according to AP and Deutsche Bank estimates.

E*Trade Financial (Charts) shares popped 14 percent after slumping 60 percent Monday on bankruptcy talk.

Apple (Charts, Fortune 500) led the list of large technology shares rallying. The tech leader rallied after China Mobile, China's largest cell phone carrier, said it was in talks with Apple to bring the iPhone to China.

Hewlett-Packard (Charts, Fortune 500), Oracle (Charts, Fortune 500) and Yahoo! (Charts, Fortune 500) were among the other big tech gainers.

Market breadth was positive and volume was strong. On the New York Stock Exchange, winners trounced losers 7 to 3 on volume of 700 million shares. On the Nasdaq, advancers topped decliners nine to five on volume of 1.22 billion shares.

Also helping the mood on Wall Street was a retreat in oil prices, from near record levels. U.S. light crude oil for December delivery fell $2.92 to $91.70 a barrel on the New York Mercantile Exchange.

The selloff gave a lift to airlines, truckers and railroads, companies that are directly dependent on fuel prices to conduct their business.

The Dow Jones Transportation (Charts) average added 1 percent.

COMEX gold for December delivery fell $11.90 to $795.80 an ounce on the New York Mercantile Exchange, stalling after a big selloff in the previous session.

In currency trading, the dollar continued to slump against the euro. The greenback inched higher against the yen.

Treasury prices fell, raising the yield on the 10-year note to 4.23 percent from 4.22 percent late Monday. Treasury prices and yields move in opposite directions. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.