Wall Street rallies on banking upgrade

Wall Street rallies on banking upgrade

New York: Wall Street shares rebounded on Monday after four straight days of losses, helped by a key brokerage upgrade of the banking sector and the first signs of growth in the services sector in a year.

The blue chip Dow Jones Industrial Average jumped 112.08 points (1.18%) in final trades to 9,599.75.

The technology-heavy Nasdaq composite rose 20.04 points (0.98%) to 2,068.15 while the Standard & Poor’s 500 index increased 15.23 points (1.49%) to a provisional close of 1,040.44.

Shares moved up from the opening bell, after as much as 2% losses in key stock indices last week especially amid concerns that unemployment could hamper recovery from prolonged recession.

Goldman Sachs’ upgrade of the US large-cap bank sector to “attractive" from “neutral" helped spark buying interest, according to Briefing.com.

“The Goldman call is noteworthy since it follows on the heels of" a big slide in bank stocks and decline for the broader market over the past two weeks, said Briefing.com’s Patrick O’Hare.

Goldman upgraded Wells Fargo to “buy" and add Capital One to its “conviction buy" list as it believed “the gap between sustainable earnings per share and current share prices is too wide."

But it stayed “cautious" on regional banks.

Also boosting the market was a survey by purchasing managers showing that the US services sector grew in September for the first time in a year, in yet another signal of economic recovery from a long recession.

The Institute of Supply Management said its nonmanufacturing index rose to 50.9% from 48.4% in August. Any number above 50% indicates growth.

“This report was noteworthy because it represented a return to growth for the services sector - the largest portion of the US economy - after 11 consecutive months of decline," analysts at Charles Schwab & Co said in a note to clients.