Wall Street's main indexes rose more than 1 percent on Tuesday, boosted by Nike and Micron following strong earnings, while beaten-down big technology stocks bounced back from an Omicron-driven rout in the previous session.
The rapidly spreading variant of the coronavirus has rattled stock markets around the world, triggering major sell-offs in the final month of the year due to worries about the strain's impact on a global economic recovery.
Nike Inc rose 6.6 percent, boosting the Dow Jones Industrial Average. It beat quarterly estimates for profit and revenue, and sounded confident of a letup in supply chain problems in its next fiscal year.
Micron Technology Inc, up 9.5 percent, led the advance among chipmakers after it forecast upbeat second-quarter earnings and topped Wall Street expectations for quarterly profit and revenue.
The two companies positive updates helped allay some concerns about broader supply chain constraints in a high inflation environment, which has become a cause for concern for central banks globally.
Ten of the 11 major S&P 500 sectors rose in early trading, while the Philadelphia SE Semiconductor index gained 1.7 percent.
"We got oversold yesterday and we are bouncing back a little bit today," said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.
"This market is more of a dead cat bounce as opposed to this new bull market that is going to rage into 2022. There are just too many concerns."
Mega-cap growth firms, including Tesla Inc, Microsoft Corp, Apple Inc, Amazon.com Inc , Meta Platforms and Alphabet Inc rose between 0.4 percent and 1.7 percent after taking a beating on Monday.
Investors have taken a more defensive stance this month, with sectors such as consumer staples, real estate and utilities among top gainers.
Most of the defensive plays made little gains on Tuesday.
"It's good to see green going into the next year but if you just take a step back and look at the broader picture you're seeing financial conditions change," said Joshua Chastant, senior investment analyst at GuideStone Capital Management.
"Our base case is that next year is going to have a lot of volatility around it, and it's definitely not going to be business as usual in the markets."
At 12:00 p.m. ET, the Dow Jones Industrial Average was up 461.08 points, or 1.32 percent, at 35,393.24, the S&P 500 was up 49.49 points, or 1.08 percent, at 4,617.51 and the Nasdaq Composite was up 187.12 points, or 1.25 percent, at 15,168.07.
Travel-related stocks, which fell in the previous session on the prospect of tighter curbs, rose on Tuesday. The S&P 1500 Airlines index jumped 5.8 percent and was set for its best day since early December.
General Mills Inc fell 4.2 percent after missing analysts' estimates for quarterly profit.
Advancing issues outnumbered decliners by a 4.46-to-1 ratio on the NYSE and by a 2.96-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new low, while the Nasdaq recorded 20 new highs and 67 new lows. (Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Editing by Anil D'Silva, Uttaresh.V and Maju Samuel)