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NEW YORK: US stock indexes rose on Tuesday as strong results from Goldman Sachs calmed worries of a substantial hit to profit from rising interest rates, but a rise in government bond yields pushed megacap growth stocks lower.

Goldman Sachs Group Inc gained 2.5% after reporting a smaller-than-expected drop in quarterly profit due to a slowdown in investment banking, which was cushioned by a boost in net interest income.

The investment bank, which is reorganizing its business into three units, wrapped up earnings from big US banks on a largely positive note, even though several lenders raised the loan loss provisions in anticipation of troubled times ahead.

“The markets are breathing a sigh of relief that earnings are coming in better than expected, particularly the banks and the financials, which have been very strong, especially versus expectations,” said David Sadkin, president at Bel Air Investment Advisors.

“But the Fed is still hiking, we’re still in the tightening cycle. If I had to guess, this is more of a short-term bear market rally, and we’ll see more volatility in the weeks ahead.” The benchmark 10-year Treasury note reversed early declines to rise for the fourth straight day, while big technology and growth names like Apple Inc, Amazon.com and Nvidia Corp cut back gains.

Microsoft Corp, however, gained 0.2% after a report it was laying off under 1,000 employees this week, becoming the latest US technology company to cut jobs or slow hiring amid a global economic slowdown.

Over the last two months, all the three major US stock indexes have lost more than 12% as investors worry that the US Federal Reserve’s war on inflation may hobble the economy.

Analysts now expect profit for S&P 500 companies to have risen just 2.8% from a year ago, much lower than an 11.1% increase expected at the start of July, according to Refinitiv data.

Meanwhile, a report said ratings agency Fitch has slashed US growth forecasts for this year and next and was set to warn that the Fed’s interest rate hikes and inflation will drive the economy into a 1990-style recession.

While economic indicators point to a likely recession, latest data showed US factory output rose in September, indicating that the manufacturing sector remains on reasonable footing despite rising interest rates.

At 12:11 p.m. ET, the Dow Jones Industrial Average was up 268.46 points, or 0.89%, at 30,454.28, the S&P 500 was up 35.15 points, or 0.96%, at 3,713.10 and the Nasdaq Composite was up 96.01 points, or 0.90%, at 10,771.81.

Netflix slid 1.7% ahead of its earnings report after markets close, with all eyes on the video-streaming company’s subscriber growth, which is seen falling in the third quarter.

Salesforce Inc jumped 4.52% after a media report that activist investor Starboard Value LP has picked up stake in the enterprise software firm.

Advancing issues outnumbered decliners by a 2.70-to-1 ratio on the NYSE and by a 2.05-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and two new lows, while the Nasdaq recorded 58 new highs and 66 new lows.

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