Banks lead markets up in rebound from recent losses

Banks lead markets up in rebound from recent losses
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First Published: Wed, Jul 07 2010. 11 32 PM IST
Updated: Wed, Jul 07 2010. 11 32 PM IST
New York: US stocks advanced more than 1% on Wednesday, rebounding from recent losses as a bullish earnings forecast from State Street Corp encouraged investors going into the earnings season.
Equities have been pressured in recent weeks, with the Dow down seven of the past eight sessions as concerns persist about the strength of the global economy.
“We were deeply oversold and thus were due for a healthy bounce like this,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
Krosby noted that markets gained more than 1% in Tuesday’s session, though they later pared those gains to close only modestly higher.
“If we end higher today, that will give us a clue as to whether this rally is just a bounce, or a prelude to more sustainable gains,” she said.
Institutional investor State Street rose 9.4% to $36.45 after it forecast second-quarter operating earnings that were sharply above expectations. Major company quarterly earnings reports begin in earnest next week.
The KBW bank index climbed 3%, while State Street rivals Northern Trust Corp rose 4.7% to $48.11 and Bank of New York Mellon Corp was up 5.3% to $26.05.
“Having a bank give this kind of preannouncement is very encouraging, and it’s giving a more positive tone to the market in general,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
The Dow Jones industrial average was up 145.69 points, or 1.50%, at 9,889.31. The Standard & Poor’s 500 Index was up 16.22 points, or 1.58%, at 1,044.28. The Nasdaq Composite Index was up 28.49 points, or 1.36%, at 2,122.37.
Energy shares were also among the day’s gainers as August crude futures advanced 2.4% to $73.69 per barrel, sending the S&P energy index up 1.9%.
Crude climbed on the expectation that upcoming data would show a drop in US inventories, a positive sign for demand, as well as weakness in the US dollar.
The fall in the dollar “suggests that risk is coming back into the market a little bit,” Krosby said.
1,350. The firm said the reduced view reflected modestly weaker earnings growth and longer-term secular headwinds.
In earnings news, Family Dollar Stores Inc tumbled 8.6% to $36.05 after it forecast fourth-quarter earnings below expectations.
Among its discount retailer peers, Dollar Tree Inc slipped 2.9% to $41.66 while BJ’s Wholesale Corp was off 1.8% at $42.42.
BP Plc Chief Executive Tony Hayward met with officials from Abu Dhabi’s investment authority as speculation mounted the sovereign fund would make a fresh investment. BP’s US-listed shares rose 2.4% to $32.66.
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First Published: Wed, Jul 07 2010. 11 32 PM IST
More Topics: Markets | US | Stocks | State Street Corp | Dow Jones |