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Wall Street boosted by return to banks

Wall Street boosted by return to banks
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First Published: Fri, May 15 2009. 08 37 AM IST
Updated: Fri, May 15 2009. 08 37 AM IST
New York: US stocks rose on Thursday as investors returned to financial and technology shares on bets the recent rally could have more room to grow after a brief pullback.
Volume, however, was light, a possible indication of a lack of broad conviction.
Technology gains were led by big-cap tech and semiconductor companies after five straight days of losses for the PHLX Semiconductor index. Apple Inc was among the top boosts on Nasdaq, rising 2.9% to $122.95, while the PHLX index climbed 3.2%.
The surge in US markets over the past two months has made investors who missed the rally anxious to get back into stocks, analysts said.
“We’ve had a bit of a correction over the last couple days and people may be going in there and adding a bit, which makes the gains sustainable,” said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania.
Defensive stocks such as consumer staples and healthcare also gave a lift, underscoring some of the lingering worry about the economy following a report that showed a jump in weekly jobless claims.
Coca-Cola Co was among the Dow’s biggest lifts, up 2.9% at $44.90, and Merck & Co Inc added 1.5% to $26.05.
The Dow Jones industrial average added 46.43 points, or 0.56%, to 8,331.32. The Standard & Poor’s 500 Index gained 9.15 points, or 1.04% to 893.07. The Nasdaq Composite Index climbed 25.02 points, or 1.50% to 1,689.21.
The gains in financials and technolgy were striking, coming shortly after some analysts said the very same sectors would likely lead the market lower, having underpinned its run-up since March.
Shares of semiconductor companies got a lift after Bank of America-Merrill Lynch raised its rating and price target on shares of Novellus Systems citing cost cutting and attractive valuations. Novellus, which provides equipment to the semiconductor industry, rose 7.1% to $16.88.
Financial shares gained, including JPMorgan & Chase & Co, up 4.4% to $35.54, and Bank of America Corp, up 2.7% to $11.31. Bank stocks have been a large part of the recent rally as investors bet that the sector had seen the worst of the credit crisis.
The S&P 500 is up 32% from the bear market low on 9 March, but is down nearly 4% for the week as investors reassessed the economic outlook.
Data showed the number of US workers filing new claims for jobless benefits rose more than expected in the latest week, pushed up by plant shutdowns related to Chrysler’s bankruptcy.
The report came on the heels of Wednesday’s figures showing consumers were still reluctant to spend and reviving worries over the length of the recession after optimism that the downturn was showing signs of abating.
United Technologies Corp was among the Dow’s top boosts, up 1.8% at $51.51. The world’s largest maker of elevators and air conditioners said order rates had stabilized and it was starting to see early signs of recovery in China.
Wal-Mart Stores Inc reported flat first-quarter earnings in line with analysts’ estimates. Its chief executive said overall business at the world’s largest retailer was stable, adding that until unemployment eased, it remained cautiously optimistic about a timetable for the economic recovery.
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First Published: Fri, May 15 2009. 08 37 AM IST
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