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Big Bank Rally Lifts US Stocks 01/16 16:03
Banks surged Wednesday following strong results from a slew of financial
companies, and U.S. stock indexes finished broadly higher.
NEW YORK (AP) -- Banks surged Wednesday following strong results from a slew
of financial companies, and U.S. stock indexes finished broadly higher.
Concerns about trade tensions between the U.S. and China derailed a bigger gain.
Financial and investment companies surged as fourth-quarter reports from
Wall Street continued to roll in. Goldman Sachs' stock had its best day in 10
years, and Bank of America its best in seven. Banks were some of the chief
beneficiaries of the corporate tax cut that took effect at the end of 2017,
which fattened their balance sheets, but their stocks endured a rough year in
2018.
Willie Delwiche, an investment strategist at Baird, said it will be a good
sign for the stock market and the economy if banks continue to report strong
results and their stocks keep rallying.
"That to me is a signal that the economy ... is maybe on firmer footing," he
said. "The important takeaway from earnings season will not be what companies
had to say about the fourth quarter as much as it will be the commentary, not
just for the current quarter but for 2019 overall."
U.S. indexes were on track for larger gains before the Wall Street Journal
reported that federal prosecutors could bring criminal charges against Chinese
tech company Huawei related to alleged theft of trade secrets from U.S.
companies. Huawei has been at the center of the trade and technology policy
dispute between the U.S. and China, and charges against the company could
increase tensions between Washington and Beijing.
The S&P 500 index gained 5.80 points, or 0.2 percent, to 2,616.10 after
rising as much as 0.6 percent during the day. The S&P 500 is up 4.4 percent so
far in January.
The Dow Jones Industrial Average added 141.57 points, or 0.6 percent, to
24,207.16. The Nasdaq composite rose 10.86 points, or 0.2 percent, to 7,034.69.
Smaller companies, especially small banks, did better than the rest of the
market. The Russell 2000 index rose 9.48 points, or 0.7 percent, to 1,454.70.
Goldman Sachs posted strong results from its advisory business in the fourth
quarter even though its trading business, like the rest of Wall Street,
struggled as stock and bond markets went through huge swings. While some
volatility gives traders an opportunity to make money, several financial firms
have said last year's swings were far too large for that. The S&P 500 fell 7
percent in October and then tumbled 9 percent in December, its worst month in
nearly a decade.
Goldman's stock jumped 9.5 percent to $197.08 after a steep slump over the
past 10 months. Bank of America climbed 7.2 percent to $28.45 after its profit
surged thanks to last year's steady rise in interest rates, which has allowed
it to charge customers more to use credit cards or take out a mortgage. Bank of
America's consumer banking business is by far its largest division by revenue
and profits.
Investment firm BlackRock rose 3.1 percent to $413.04 and regional bank
Comerica picked up 5.5 percent to $78.13 after they reported their quarterly
results.
Britain's FTSE 100 stock index slipped 0.5 percent after Parliament rejected
the deal negotiated by Prime Minister Theresa May with European leaders over
the country's departure from the European Union. May's government survived a
vote of no confidence after the close of trading in the U.K.
Economists warn that an abrupt break with the EU on March 29 could batter
the British economy, which would face new tariffs and other trade barriers.
Chaotic scenes at borders, ports and airports could also follow. But since
investors have expected that outcome for some time, British stocks didn't make
big moves as May's deal foundered.
The pound rose to $1.2876 from $1.2834. It's fallen 6.6 percent in the last
12 months.
Fiserv is buying First Data in a $22 billion all-stock deal, creating a
giant player in the payments and financial technology sector. First Data surged
21.1 percent to $21.24 and Fiserv lost 3.3 percent to $72.57.
Snap slumped again after the social media company said its chief financial
officer is leaving after just eight months on the job. Tim Stone is the second
Snap CFO to leave in the past year and he's part of a string of top executives
who have left in recent months. A redesign of Snapchat's service has also been
heavily criticized by users.
Snap traded above $20 last February, but Wednesday's loss of 13.8 percent
brought it down to $5.64.
Benchmark U.S. crude added 0.4 percent to $52.31 per barrel in New York.
Brent crude, the international standard, rose 0.1 percent to $61.37 a barrel in
London.
Bond prices dipped. The yield on the 10-year Treasury note rose to 2.72
percent from 2.70 percent.
Germany's DAX rose 0.4 percent and France's CAC 40 added 0.5 percent.
Japan's Nikkei 225 index, weighed down by weak machinery orders in November,
slipped 0.6 percent. South Korea's Kospi added 0.4 percent and Hong Kong's Hang
Seng rose 0.3 percent.
In other commodities trading, wholesale gasoline edged up 0.3 percent to
$1.42 a gallon and heating oil rose 1.2 percent to $1.89 a gallon. Natural gas
fell 3.3 percent to $3.38 per 1,000 cubic feet.
Gold rose 0.4 percent to $1,293.80 an ounce and silver inched up 0.1 percent
to $15.64 an ounce. Copper rose 1.5 percent to $2.67 a pound.
The dollar rose to 108.92 yen from 108.57 yen. The euro slipped to $1.1398
from $1.1402.
(CZ)
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