US STOCKS-Wall Street closes higher as investors digest earnings, megacap outlook

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Tesla kicks off Magnificent Seven earnings

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GM shares rise on upbeat Q1 results

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JetBlue plunges after trimming revenue forecast

(Updates to 16:00 PM ET)

By Chibuike Oguh

April 23 (Reuters) -

U.S. stocks closed higher on Tuesday following positive earnings from top-tier companies and as investors were focused on quarterly results from Magnificent Seven and other megacap growth stocks.

Tesla kicked off the earnings cycle for technology heavyweights after markets close on Tuesday. That will be followed by results from other tech majors, including Microsoft , Alphabet, and Meta Platforms, later this week.

Markets were also buoyed by upbeat earnings from companies such as General Motors, which closed up after the automaker's better-than-expected quarterly results.

Ten out of 11 S&P 500 sectors were advancing led by gains in equities in communication services and technology sectors. The S&P Materials sector ended lower dragged by steelmaker Nucor Corp, which lost ground after a first-quarter earnings miss. "We're having a continuation of an oversold balance that started yesterday and the catalyst today is that markets are now refocused on earnings reports across a wide array of sectors that were strong," said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.

According to preliminary data, the S&P 500 gained 58.81 points, or 1.17%, to end at 5,069.41 points, while the Nasdaq Composite gained 245.34 points, or 1.59%, to 15,696.64. The Dow Jones Industrial Average rose 267.19 points, or 0.70%, to 38,494.32.

Data on Tuesday showed that U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly even as input prices rose sharply, suggesting possible relief ahead for rising consumer prices.

Investors will be eyeing the release of the March Personal Consumption Expenditures (PCE) index - the Federal Reserve's preferred inflation gauge - which is due on Friday.

Money markets are now pricing in just about 43 basis points of interest-rate cuts, down from about 150 bps seen at the start of the year, according to LSEG data.

"The PMI report was a little bit weaker and the employment was a little bit weaker and the market at this point is taking that is a bad-news-there-is-good-news, meaning the people are becoming too hawkish on Fed expectations," Lerner added.

Spotify surged after the Swedish music streaming giant posted gross profit topped 1 billion euros ($1.1 billion) for the first time.

Bullish full-year profit forecast helped to lift GE Aerospace shares. Danaher gained after the life sciences firm beat quarterly profit and sales expectations.

Shares of JetBlue plunged as the low-cost carrier trimmed its annual revenue forecast following lukewarm first-quarter revenue.

(Reporting Chibuike Oguh in New York; additional reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Aurora Ellis)