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Uber ( UBER ) jumps after Q2 revenue beat

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Caterpillar ( CAT ) rises after Q2 profit beat

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Indexes: Dow up 0.8%, S&P 500 up 1%, Nasdaq up 1%

(Updates to 4:30 p.m. ET)

By Caroline Valetkevitch

NEW YORK, Aug 6 (Reuters) -

The S&P 500 and Nasdaq ended 1% higher on Tuesday as

investors jumped back into the market a day after a dramatic

sell-off, with recent comments by Federal Reserve officials

easing U.S. recession worries.

The Dow rose as well, but all three major stock indexes

pared gains heading into the close and ended well off their

highs of the day.

U.S. central bank policymakers have

pushed back against

the idea that weaker-than-expected July jobs data means the

economy is headed for a recession, but they have also warned

that the Fed will need to cut interest rates to avoid such an

outcome.

Stocks had sold off as weak economic data raised worries

of a U.S. recession.

Traders are pricing in a 75% chance the Fed will cut

rates by 50 basis points at its next policy meeting in

September, and a 25% chance of a 25 basis point reduction, the

CME Group's FedWatch Tool showed.

All major S&P 500 sectors ended higher, with real estate

and financials up the most. Technology megacap

Nvidia ( NVDA ) rose nearly 4%, giving the S&P 500 and Nasdaq

their biggest boosts.

"The market had just gotten top heavy, but it did reprice a

decent amount, particularly the Nasdaq, and people are coming

back to the idea that with lower rates it should provide a

support for stocks," said Rick Meckler, partner at Cherry Lane

Investments, a family investment office in New Vernon, New

Jersey.

The Dow Jones Industrial Average rose 294.39 points,

or 0.76%, to 38,997.66, the S&P 500 gained 53.7 points,

or 1.04%, at 5,240.03 and the Nasdaq Composite advanced

166.77 points, or 1.03%, to 16,366.86.

The Nasdaq Composite is still up 9% so far in 2024, driven

earlier in the year by strong earnings and optimism over

artificial intelligence.

"While (recent) earnings were good, in many cases they

weren't great," Meckler said.

Valuations

have been stretched. The S&P 500 was last trading at 20

times forward 12-month earnings estimates, compared with its

long-term average of 15.7, LSEG data showed.

Recent market concerns were exacerbated as investors wound

down yen-funded trades, used to finance acquisition of stocks

for years, after a surprise Bank of Japan rate hike last week.

The next big Fed event is Chair Jerome Powell's speech at

the Jackson Hole, Wyoming, on Aug. 22-24.

Uber ( UBER ) shares jumped 11% after the ride-sharing and

food delivery provider beat Wall Street estimates for

second-quarter revenue and core profit, helped by steady demand

for its services.

Caterpillar ( CAT ) gained 3% after beating analysts'

estimates for second-quarter profit, as higher prices on its

larger excavators and other equipment countered moderating

demand in North America.

Volume on U.S. exchanges was 13.52 billion shares, compared

with the 12.48 billion average for the full session over the

last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a

2.59-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and seven new

lows; the Nasdaq Composite recorded 31 new highs and 144 new

lows.

(Additional reporting by Shubham Batra and Shashwat Chauhan in

Bengaluru; Editing by Saumyadeb Chakrabarty, Shinjini Ganguli

and Richard Chang)