By Chris Matthews and Barbara Kollmeyer, MarketWatch

Samsung profit warning dampens appetite for tech stocks

Stock indexes advanced sharply Tuesday, but were off their intraday peak, as major benchmarks attempted to notch a third straight session of wins backed by optimism over trade talks.

Gains in Apple Inc., helped to propel the market higher but financial institutions lagged behind other major sectors.

How are major indexes trading?

The Dow Jones Industrial Average rose 265 points, or 1.1%, to 23,797, while the S&P 500 index gained 22 points, or 0.9%, to 2,571. The Nasdaq Composite Index rose 66 points, or 1%, to 6,889.

Both the S&P 500 and the Nasdaq briefly slipped into negative territory earlier in the session, with the broader market coming off session highs. At its peak, the Dow was up 333 points, the S&P 500 gained 30 points, while the Nasdaq advanced 86 points early Tuesday morning.

Month-to-date, the Dow is up 1.7%, the S&P has climbed 2.3%, while the Nasdaq has advanced 3.6%.

(http://www.marketwatch.com/story/us-stock-market-poised-to-pull-back-as-wall-street-watches-china-trade-talks-2019-01-07)Read: Now that the bulls are back, it may be time to buy stocks again (http://www.marketwatch.com/story/its-time-to-buy-stocks-again-these-encouraging-signs-are-telling-strategists-2019-01-05)

What's driving the market?

Optimism on the trade front continued to nudge investors toward perceived riskier assets such as stocks. Face-to-face negotiations between U.S. and China officials were entering a second day on Tuesday, with hopes rising that talks will bear fruit after President Xi Jinping's top policy aide Chinese Vice Premier Liu He made an appearance on Monday.

Read:Kim Jong Un makes his fourth visit to China in the past year (http://www.marketwatch.com/story/kim-jong-un-makes-his-fourth-visit-to-china-in-the-past-year-2019-01-07)

Though concrete progress on broader trade concerns remains elusive, China did approve five genetically-modified crops for import on Tuesday that could help increase Chinese imports of U.S. agricultural goods, including corn and soybean strains developed by DowDuPont Inc. (DWDP), a move interpreted by some traders as evidence of goodwill on the part of Chinese.

President Trump highlighted trade-negotiation momentum, tweeting Tuesday morning that the talks were going well.

(https://twitter.com/realDonaldTrump/status/1082627015235256321)

Meanwhile, the world's biggest smartphone and chip maker cautioned over profits Tuesday, which comes a week after Apple Inc.'s own shock warning, which triggered global equity volatility. Citing "mounting macro uncertainties," Samsung Electronics Co. (005930.SE)warned of a 29% drop in fourth-quarter operating profit (http://www.marketwatch.com/story/samsung-electronics-warns-profit-will-tumble-29-2019-01-08), far worse than analysts were expecting.

With a partial government shutdown now on its 17th day, lots of attention expected to focus on a prime-time border-wall speech from President Donald Trump (http://www.marketwatch.com/story/all-major-tv-networks-to-carry-trumps-border-speech-tuesday-night-2019-01-07) due Tuesday evening. Some government employees will miss their first paycheck this week as a result of an impasse between Trump and Democratic lawmakers over funding for a proposed wall between the U.S. southern border and Mexico, though the IRS did announce Monday night (http://www.marketwatch.com/story/irs-to-issue-tax-refunds-during-partial-government-shutdown-white-house-says-2019-01-07) that it would continue to process income tax refunds during the shutdown, in a reversal of longstanding policy.

What are strategists saying?

"We're seeing a spillover from Friday," when investors both received news of a still-booming job market paired with moderate inflation and a much more dovish tone from the Federal Reserve, Eric Wiegand, senior portfolio manager at U.S. Bank told MarketWatch. "Markets are riding the wave of improved sentiment as well as seeing some glimmer of progress regarding Chinese trade negotiations," he said.

Nevertheless, it remains to be seen whether the uptrend in equity values in recent weeks is "a snap back rally in a bear market or an the beginning of an actual trend reversal," he said.

"The key catalyst here is the U.S.-China trade talks and investors are hoping for some kind of progress that will allow equities to recover, while the recent downbeat tone coming from the Fed is also helping things amid expectations for fewer rate hikes," said Konstantinos Anthis, head of research at ADSS, in a note to clients.

"However, investors will now start focusing on U.S. earnings' season and it will be key to see whether corporate results continue to slow down, further dampening risk sentiment," he added.

Which stocks are in focus?

Shares of Union Pacific Corp. (UNP) are popping 8.7%, after the railroad freight company announced that it hired former Canadian National executive Jim Vena as chief operating officer.

Illumina Inc.'s (ILMN) stock is down 5.7% Tuesday, after the company issued updated guidance at the 2019 J.P. Morgan health care conference.

Shares of Sears Holdings Corp. (SHLDQ) are rising 13% Tuesday, after a Wall Street Journal report (https://www.wsj.com/articles/auction-for-sears-will-go-ahead-on-january-14-lawyer-11546971475?mod=hp_lead_pos4) that the company could still avoid liquidation via a $4.4 billion buyout plan proposed by billionaire Eddie Lampert. The stock had been down as much as 50%, after reports earlier Tuesday that the company will seek liquidation.

Monster Beverage Corp. (MNST) shares are up 6.2% Tuesday, after SunTrust Robinson Humphrey upgraded the stock from buy to hold, while raising its price target from to by from $50 to $65.

Boeing Co.'s (BA) stock is up 3.3% Tuesday, leading all Dow components, after the aerospace giant reported fourth-quarter commercial airplane deliveries that exceeded expectations.

Shares of JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), major components of the Dow and S&P 500 were both retreating.

Shares of Apple Inc. (AAPL) added to gains after an excerpt from a coming CNBC interview showed the iPhone maker's CEO, Tim Cook, emphasizing that the company has "never been better,"--a reference to critics of the company after Apple reduced its sales estimates (http://www.marketwatch.com/story/apple-stock-falls-8-after-cutting-holiday-sales-forecast-2019-01-02).

What data are ahead?

Small business optimism fell in December (http://www.marketwatch.com/story/small-business-sentiment-declines-to-14-month-low-in-december-2019-01-08), according to the National Federation of Independent Business small-business optimism index, which decreased 0.4 point to a seasonally adjusted level of 104.4, its lowest in 14 months.

The number of new job openings fell to its lowest level since June, at 6.89 million, down from 7.13 million in October, the Labor Department reported Tuesday (http://www.marketwatch.com/story/job-openings-fall-to-lowest-level-since-early-summer-but-not-because-companies-dont-want-to-hire-2019-01-08). The rate that workers are voluntarily leaving their jobs also fell slightly, though both measures still indicate an historically strong job market, with job openings still outnumbering unemployed Americans, and the quit rate near all-time highs.

The Federal Reserve will release data on consumer credit at 3 p.m.

The Census Bureau was scheduled to release data on the trade deficit Tuesday morning, but the release is delayed due to the government shutdown.

How did U.S. benchmarks fare yesterday?

On Monday (http://www.marketwatch.com/story/us-stock-market-poised-to-pull-back-as-wall-street-watches-china-trade-talks-2019-01-07), the Dow Jones Industrial Average rose 98.19 points, or 0.4%, to finish at 23,531.35, while the S&P 500 index advanced 0.7% to 2,549.69. The Nasdaq Composite Index jumped 84.61 points, or 1.3%, to 6,823.47.

How are other markets trading?

Asian markets finished mixed (http://www.marketwatch.com/story/asian-markets-mixed-as-us-china-trade-talks-head-into-second-day-2019-01-07), with South Korea's KOSPI Composite Index lower on Samsung's warning, while Japan's Nikkei 225 index rose.

In Europe, stocks rose (http://www.marketwatch.com/story/european-markets-jump-as-hopes-over-trade-deal-rise-2019-01-08), with the Stoxx Europe 600 up 1.1% Tuesday.

The dollar (http://www.marketwatch.com/story/dollar-stages-modest-recovery-sterling-slides-with-only-80-days-left-until-brexit-2019-01-08) rose, while gold prices (http://www.marketwatch.com/story/gold-pulls-back-as-stocks-dollar-advance-2019-01-08) settled lower and crude-oil futures (http://www.marketwatch.com/story/oil-on-the-verge-of-logging-longest-streak-of-gains-in-about-18-months-2019-01-08) rose 1.7%

(END) Dow Jones Newswires

January 08, 2019 14:04 ET (19:04 GMT)