S&P 500, Nasdaq rise as earnings take centre stage

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Meanwhile, Wall Street's fear gauge hovered at its highest level in almost two months on jitters over the outcome of the election.

The S&P 500 slid 1.9 percent, its biggest single-day decline in more than a month.

The Dow Jones Industrial Average lost 650 points, or 2.29 per cent, at 27,685.71.

In energy trading, US benchmark crude lost $1.37 to $38.48 a barrel in electronic trading on the New York Mercantile Exchange.

Stocks also fell across much of Europe and Asia.

"It's kind of a ideal storm", said Ross Mayfield, investment strategy analyst at Baird.

The Dow is down 853.06 points, or 3%.

The Dow Jones closed 650.19 points lower on Monday, registering its worst performance since early September after the United States reported a daily record for new Covid-19 cases over the weekend. The Nasdaq composite lost 189.34 points, or 1.6 percent, to 11,358.94.

Volume on USA exchanges was 8.72 billion shares, lower than the 20-day average of 8.9 billion shares. In Europe, Spain's government has declared a national state of emergency that includes an overnight curfew, while Italy ordered restaurants and bars to close each day by 6 p.m. and shut down gyms, pools and movie theaters.

Hopes are fading, meanwhile, that Washington will be able to provide more support for the economy anytime soon.

U.S. House of Representatives Speaker Nancy Pelosi spoke with Treasury Secretary Steven Mnuchin about COVID-19 relief legislation. But even if a deal is reached, it could wither in the face of resistance from Republicans controlling the Senate.

Check out more earnings previews and estimates at our weekly earnings calendar.

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"While we are seeing nations attempt to stifle the spread of the virus through more localised and tentative restrictions, it seems highly likely that we will eventually see a swathe of nationwide lockdowns if the trajectory can not be reversed", said Joshua Mahony, senior market analyst at IG in London.

The parade of companies reporting better profits than expected for the last quarter also continued to grow, helping to steady the market somewhat.

But momentum has slowed after a round of supplemental unemployment benefits and other stimulus that Congress approved earlier this year expired.

Wall Street futures had stocks opening higher ahead of the bell on Tuesday as major indices looked set to attempt to reclaim some of the ground lost in the previous session.

Travel-related stocks that are vulnerable to COVID-19 related curbs including American Airlines, United Airlines Holdings and Booking Holdings Inc fell between 3 percent and 4.5 percent.

All the 11 primary S&P 500 sectors pulled back, with energy down 3.47 percent, leading the losses. Markets in Hong Kong were closed for holidays. Strong exports led the rebound, economists said. Stocks of companies worst hit by the pandemic logged some of the biggest losses.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% have beaten Wall Street expectations, according to Refinitiv data. Besides Amazon and Apple, Ford Motor, General Electric and Google's parent company, Alphabet, are also on the docket.

"We think the ability to get stimulus done is fading each day as we get closer to the USA election", says Charlie Ripley, senior investment strategist for Allianz Investment Management, who adds that we "are reminded that volatility is expected to stay as uncertainties surrounding the path of the virus and the outcome of the election continue to weigh on investors' minds".

"It's going to be a little bit volatile in the next week depending on the results, but we're not expecting weeks of uncertainty", she said.

The broader markets managed to at least avoid another debacle like yesterday's, but stocks still struggled Tuesday as bullish catalysts remained scarce.

In another reflection of volatility, the yield on the 10-year US Treasury note fell as investors flocked to safer ground.

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