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Wall Street rallies on renewed economic optimism

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(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.) (Updates to market close)

NEW YORK, July 20 (Reuters) - Wall Street ended sharply higher on Tuesday, bouncing back from a multi-day losing streak as a string of upbeat earnings reports and revived economic optimism fueled a risk-on rally.

All three major U.S. stock indexes gained more than 1% with the blue-chip Dow, on the heels of its worst day in nine months, leading the charge.

The S&P notched its first advance in four days, and the Nasdaq posted its first gain in six.

"It's a buy-the-dip mentality coming into the market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Economically sensitive small caps and transports outperformed the broader market.

Benchmark U.S. Treasury yields bounced back from five-month lows, in the wake of their biggest single-session decline since February in the prior session. This bolstered rate-vulnerable banks.

"The economically sensitive stocks are up today," Carlson added. "When the 10-year (Treasury yield) goes down in a short period of time, that typically doesn't happen with an economy that's supposed to be growing. Firming in the 10-year (yield) indicates that perhaps the economy isn't going to be falling off a cliff."

Mounting concerns over the highly contagious Delta variant of COVID-19, now responsible for the majority of new infections, have sparked sell-offs in recent sessions as worldwide vaccination efforts gather momentum.

"Things like the Delta variant can certainly impact in the margins," Carlson said. "It doesn't take a whole lot of fear in some investors to create what we saw yesterday."

For an interactive graphic on global vaccine deployment and availability, click here here.

Unofficially, the Dow Jones Industrial Average rose 550.48 points, or 1.62%, to 34,512.52, the S&P 500 gained 64.72 points, or 1.52%, to 4,323.21 and the Nasdaq Composite added 223.89 points, or 1.57%, to 14,498.88.

Second-quarter reporting season has hit full-stride, with 56 of the companies in the S&P 500 having posted results. Of those, 91% have beaten consensus, according to Refinitiv.

Analysts now see annual S&P earnings growth of 72.9% for the April-June period, a significant improvement over the 54% growth seen at the beginning of the quarter.

Halliburton Co rose after a bounce-back in crude prices boosted oilfield services demand, leading the company to post its second consecutive quarterly profit.

Peloton Interactive Inc advanced following its announcement that it would provide UnitedHealth Group's fully insured members free access to its live and on-demand fitness classes.

Results from Netflix Inc, United Airlines Holdings and Chipotle Mexican Grill Inc are expected shortly. (Reporting by Stephen Culp; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman)

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