Banks, tech stocks lead broad Wall Street rebound
Banks, tech stocks lead broad Wall St rebound. (Reuters)
The S&P 500 on Wednesday was on pace for its biggest one-day percentage gain in about two months as financial and tech stocks led a broad market rebound. The benchmark S&P had suffered its biggest one-day drop in about six weeks on Tuesday after a healthcare bill was delayed in the U.S. Senate. The healthcare legislation is the first major plank of President Trump’s domestic policy agenda, with investors eager for him to move onto his other plans including tax cuts, infrastructure spending and deregulation. Investors may be reevaluating their assessment of the impact of the Senate’s delay on the market and Trump’s agenda, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey. “The market has had trouble really appreciating, but it has had, even more, trouble declining,” Meckler said. “It seems like any negative period is very quickly met with new buyers.”
“Interest rates are still very low and a lot of investors see little opportunity to invest anywhere but in stocks,” he added. The Dow Jones Industrial Average rose 142.36 points, or 0.67 percent, to 21,453.02, the S&P 500 gained 20.47 points, or 0.85 percent, to 2,439.85 and the Nasdaq Composite added 71.94 points, or 1.17 percent, to 6,218.56. Financials were the best performing sector, rising 1.5 percent.
Bank stocks including JP Morgan Chase and Bank of America helped boost the S&P 500, both rising more than 2 percent. The interest rate-sensitive group was helped by an increase in yields for 10-year Treasuries and by a widening spread between shorter- and longer-dated U.S. bonds. The stocks were also rising ahead of stress test results expected later in the day from the Federal Reserve that could pave the way for the banks to return more capital to shareholders.
Tech stocks gained 1 percent, bouncing back from their worst day in more than two weeks. The sector has led the S&P 500’s 9 percent gain this year, but has pulled back recently as some investors question whether the group is too expensive. The Nasdaq was posting its second-best day of the month, as the tech-heavy index bounced off its 50-day moving average.
With second-quarter corporate earnings set to begin in earnest, investors are looking for results to support equity valuations. The S&P 500 is trading at nearly 18 times forward earnings estimates, well above its long-term average of 15 times. In earnings news, General Mills shares rose 2.1 percent after the Cheerios cereal maker reported a better-than-expected quarterly profit. Advancing issues outnumbered declining ones on the NYSE by a 4.14-to-1 ratio; on Nasdaq, a 3.48-to-1 ratio favored advancers.