U.S. Stocks Led Higher by Financial Companies
June 28 2017 - 3:10PM
Dow Jones News
By Amrith Ramkumar and Riva Gold
Shares of financial companies led U.S. stocks higher Wednesday,
as major indexes rebounded from their worst session in weeks.
The Dow Jones Industrial Average rose 153 points, or 0.7%, to
21464, as gains in J.P. Morgan Chase & Co., Caterpillar and
Goldman Sachs Group and put the blue-chip index on course for its
biggest gain since April. The S&P 500 rose 0.9% and the Nasdaq
Composite climbed 1.3%.
A day earlier, the Dow industrials and S&P 500 posted their
biggest declines in more than a month. Some investors and analysts
said Senate Republicans' decision Tuesday to postpone a vote on
their health-care bill cast doubt on the chances for tax cuts and
infrastructure spending, weighing on the market.
However, some said the pullback was a chance to snap up stocks,
which have been rising this year with help from improved corporate
earnings.
"Nothing about the economy and the makeup of the market has
changed, so people are viewing this as the only opportunity they
get to jump in and commit some capital," said Michael Antonelli,
equity sales trader at brokerage Robert W. Baird & Co.
Wednesday's rally was broad.
Technology shares rebounded and were recently up 1.1% in the
S&P 500. Tech has been the index's best-performing sector this
year, but is down this month.
"Everybody remembers the [year] 2000 slipping of the tech
sector," said Jae Yoon, chief investment officer at New York Life
Investment Management. "But I have no concerns about tech
valuations," he said, noting that in terms of price-to-earnings
metrics, the sector is trading much closer in line to the S&P
500 than it did at its peak.
Financial stocks rose 1.6% in the S&P 500, with Bank of
America adding 2.8%. The bank is expected to get a stress-test
result from the Federal Reserve that will let it increase its
dividend payout to shareholders. Wells Fargo & Co. and J.P.
Morgan Chase were also up more than 2%.
Financial shares have also been supported recently from upticks
in bond yields, which should help banks' net-interest margins, a
key measure of lending profitability.
The yield on the 10-year Treasury note was recently 2.224%,
according to Tradeweb, compared with 2.198% Tuesday. Yields rise as
prices fall.
The bond market was choppy as media reports suggested investors
were reading too much into a Tuesday speech by European Central
Bank President Mario Draghi, which many interpreted as suggesting
that the bank might start winding down its stimulus program.
Also Wednesday, Bank of England Gov. Mark Carney said interest
rates in the U.K. may need to rise if the economy keeps improving.
The pound jumped 0.9% to $1.2934, weighing on the export-heavy FTSE
100, which fell 0.6%. The Stoxx Europe 600 was little changed.
Elsewhere, Japan's Nikkei Stock Average fell 0.5%.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
June 28, 2017 14:55 ET (18:55 GMT)
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