March 28, 2024

Financial Stocks Lift Wall Street

Bank stocks rose more than 4 percent by the close of the trading session, backtracking on the steep losses incurred on Monday that helped send the main stock indexes back into negative territory for the year.

By the end of the day, the Dow Jones industrial average was up 1.58 percent, or 180.05 points, at 11,577.05. The broader Standard Poor’s 500-stock index climbed more than 2 percent, or 24.52 points, to 1,225.38, while the Nasdaq composite index was up by 1.6 percent at 2,657.43.

The Dow finished fractionally below where it started the year, and the Nasdaq was 0.17 percent higher for the year to date.

The Treasury’s 10-year note fell 6/32, to 99 18/32. The yield rose to 2.18 percent, from 2.16 percent late Monday.

“Every day does not have to follow exactly the pattern of a yo-yo, but sometimes that is what happens,” said Lawrence Creatura, a portfolio manager at Federated Investors. “Yesterday’s downdraft was large, and it is reasonable to have investors looking for bargains today.”

Some analysts said the late-day gains might be attributed to exchange-traded funds. A Guardian newspaper report, quoting unidentified diplomats, saying that France and Germany had agreed on a plan to bolster Europe’s rescue fund could also have inspired such a reaction. That was “entirely plausible,” said Brian Gendreau, market strategist for the Cetera Financial Group. He and others noted that the market was highly volatile.

“Markets buy the rumor,” Eric Viloria, a senior currency strategist at Forex.com, said in a research note that referred to the report. “Today’s price action highlights how sensitive the markets are to headlines.”

Investors sifted through news about France, after Moody’s Investors Service said the country’s AAA credit rating was at risk. It was the latest headline to remind investors of the challenges facing Europe.

“Europe continues to be the No. 1 negative,” said Nick Kalivas, vice president for financial research at MF Global. “We  just are not seeing any signs of resolution there.” He said he believed that the comments about France were keeping buyers cautious.

The debt crisis could also have an impact on China, the world’s second-largest economy after the United States. New data showed that growth in China in the third quarter had slowed slightly to 9.1 percent. But Mr. Kalivas said he suspected the data could be “a little bit supportive” of the markets because industrial production and retail sales were firm.

Although the markets have been beset by volatility in recent months, buffeted largely by the instability related to the debt crisis in Europe, corporate results trickling out are a major factor giving investors direction.

Analysts believed investors were studying corporate profits for direction, specifically with banks, although some believed investors were already trading them at a discount. 

“The rumor mill is so rampant,” said Michael A. Mullaney, vice president at the Fiduciary Trust Company. “The bottom line is, the one thing I have been mildly encouraged about, is the earnings reports have been pretty good, so on average that hopefully lends a degree of support for the market.”

Goldman Sachs reported on Tuesday that it had a loss of $428 million in the quarter, compared with a $1.7 billion profit a year ago. Bank of America said it had a $6.2 billion profit, and revenue was up 6.6 percent.

Bank of America was up more than 10 percent at $6.64 and Goldman rose 5.5 percent to $102.25.

Investors have been dissecting the fine print of reports for a glimpse into the future of the economy.

“We are in earnings season now, and managements’ forward-looking comments are likely to dominate other factors,” Mr. Creatura said. “Today, because of some strong announcements, we are seeing a nice bid to the markets.”

The EMC Corporation, for example, said it expected global information technology spending to grow. It rose 5.8 percent to $23.99 after reporting a 28 percent rise in third-quarter earnings. VMware Inc. rose 8.2 percent, to $96.86, after it said net income more than doubled.

But Mr. Creatura said more volatility could be in store for banks, depending on what happened in Europe.

Article source: http://feeds.nytimes.com/click.phdo?i=e74f674490418475978869eb0e2e930e

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