New York: US stocks rose on Thursday as a brokerage’s upbeat view on US banks drove a run-up in financials, while soaring prices of oil and other commodities lifted natural resource companies on bets the economic slump is waning.
RBC Capital Markets upgraded the banking sector, saying it is poised for a multiyear bull market. The KBW bank index added 4.8%.
A surge in crude oil prices underpinned the broader market after Goldman Sachs raised its year-end oil price forecast to $85 a barrel, saying economic stabilization and tight supplies should bode well for prices.
US crude settled up 4% at $68.81 a barrel on the New York Mercantile Exchange.
“The bigger gain in oil, not just today, is encouraging on the macro level. It’s indicative of demand,” said Cleveland Rueckert, market analyst at Birinyi Associates Inc, in Stamford, Connecticut.
But Rueckert said he preferred for oil to hold around $60 barrel. “You don’t want to have the same thing that happened last year when it ... becomes a burden to a lot of the consumers who are supposed to drive economic growth.”
The Dow Jones industrial average gained 74.96 points, or 0.86%, to 8,750.24. The Standard & Poor’s 500 Index climbed 10.70 points, or 1.15%, to 942.46. The Nasdaq Composite Index rose 24.10 points, or 1.32%, to 1,850.02.
A broad run-up in commodities prices lifted shares of basic material companies, with Alcoa Inc up 6.2% at $10.69, while Newmont Mining advanced 2.2% to $47.44.
The S&P materials index gained 2.2%, while the gold BUGS index rose 3.3%.
Shares of Caterpillar Inc , which sells bulldozers and excavators, shot up 3.7% to $38.02.
Among bank stocks, shares of Bank of America climbed 6% to $11.87, while Wells Fargo shot up 4.02% to $25.10.
Shares of JPMorgan Chase shares rose 4.03% to $35.35, a gain that put the stock among the Dow’s top boosts. Citigroup raised its price target on JPMorgan’s stock and said it saw the bank’s commercial real estate losses as manageable.
The brokerages’ positive views on the financial sector is of keen interest to investors, with the government still trying to resuscitate the sector to support the economic recovery.
Plane maker Boeing rose 4.6% to $50.57 after UAL Corp, parent of United Airlines, asked Boeing and its European competitor EADS to bid on an order of up to 150 planes.
In the energy sector, Chevron Corp shares ended up 2.2% to $69.72, while Exxon Mobil added 1.3% to $72.98.
The S&P energy index rose 2%.
Thursday’s economic reports generally supported expectations that the recession-hit economy is starting to improve, albeit with some misgivings about disappointing May sales reported by major retailers.
On the Nasdaq, Apple Inc shares rose 2% to $143.74 after Societe Generale started coverage of the technology bellwether with a “buy” rating.
Government data showed US non-farm productivity rose by 1.6% in the first quarter, much stronger than initially estimated, while the number of workers filing new claims for jobless benefits fell last week.
Investors, however, are cautious about what Friday’s report on US employment might reveal as they look for more definitive signs that the recession that begun in December 2007 is easing. Since hitting a 12-year low on 9 March, the S&P 500 has risen nearly 40%.