New York: The S&P 500 rose on Wednesday to its highest level since the collapse of Lehman Brothers, led by bank stocks that have leapfrogged other sectors in December.
The banks -- epicenter of the credit crisis two years ago -- led indexes higher as a December run helped keep the market’s year-end rally afloat. The KBW Bank Index rose 1.9%, led by regional institutions.
“The financial sector is unique in that it has spent two consecutive years in the performance basement,” said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors in Rochester, New York.
“Today financials look a little bit more investable than they did 18 or 24 months ago because the price is right and some risk has has been extracted.”
The S&P 500 has risen for five sessions in a row but gains have been modest and on light volume. The benchmark’s relative strength index points to a pullback in the near term, but for now investors don’t seem worried.
Bank of America Corp rose 3.1% to $13.38 and JPMorgan Chase & Co climbed 2.8% to $42.16, giving the greatest boost to the Dow industrials.
Regional banks outpaced their larger counterparts after recent merger activity in the sector boosted hopes for more M&A to come. Hancock Holding Co agreed to buy Whitney Holding Corp on the heels of last week’s takeover of Marshall & Ilsley Corp by Bank of Montreal.
The KBW regional bank index was up 3.7% and is now up 19.4% for the month. Whitney Holding surged 28.8% to $14. United Bankshares Inc jumped 4.6% to $29.80 after KBW raised its price target to $28 from $23.
The Dow Jones industrial average added 26.33 points, or 0.23%, to 11,559.49. The Standard & Poor’s 500 Index gained 4.24 points, or 0.34%, to 1,258.84. The Nasdaq Composite Index edged up 3.87 points, or 0.15%, at 2,671.48.
The S&P 500 climbed above 1,255.08 where the index closed just days after Lehman filed for bankruptcy in September 2008. For the year, the index is up 12.9%, including a 6.6% December run.
“Today it looks like an economic dawn with some scattered clouds on the horizon, but there’s no denying things are better today than they were then,” said Creatura. He noted the light holiday season volume makes the milestone somewhat less robust.
Energy shares rose as crude oil futures settled 0.7% higher at $90.48 a barrel. Chevron Corp added 0.7% to $89.89.
Walgreen Co rose after the drugstore chain posted higher profit on increased prescription sales and a slower pace of store openings that helped control costs. Its shares rose 5.5%, the second-best percentage gain on the S&P 500, to $38.85.