NEW YORK: The Dow and the S&P 500 rose on Tuesday after more upbeat earnings reports from some of the country’s top lenders boosted the banking index to its highest since a crisis rattled the sector earlier this year.
Bank of America posted a 20% surge in second-quarter profit, while Morgan Stanley beat analysts’ expectations for quarterly results, sending their shares up between 4% and 6%.
“The earnings were greater than satisfactory,” said Peter Andersen, founder of Andersen Capital Management.
“Big banks act as a temperature gauge of the macro economy and so far the big banks have pleased many investors.” Some of the largest US banks, including JPMorgan Chase and Wells Fargo, reported a profit boost last week, helped by US Federal Reserve’s rapid interest rate hikes, which pointed towards a resilient economy.
The S&P 500 banks index was up 1.7% on Tuesday, hitting its highest levels since early March, while the KBW regional banking index rose 3.3 The banking index has fallen 3.7% so far this year, in the aftermath of a banking crisis that took down three lenders and pummeled the sector, underperforming the S&P 500 index that has notched an 18.1% gain in the same period.
Leading gains on the S&P 500, shares of Charles Schwab jumped 11.4% after the brokerage posted a smaller-than-expected drop in quarterly profit.
Wall Street rallied last week after consumer and producer prices data provided evidence that the economy had entered a disinflation phase, stoking hopes that the Fed will soon end its monetary policy tightening.
At 11:38 a.m. ET, the Dow Jones Industrial Average was up 352.71 points, or 1.02%, at 34,938.06, the S&P 500 was up 14.90 points, or 0.33%, at 4,537.69, and the Nasdaq Composite was down 14.91 points, or 0.10%, at 14,230.04.
Earlier in the day, domestic retail sales rose less than expected in June, while production at domestic factories unexpectedly fell during the month, but rebounded in the second quarter as motor vehicle output accelerated.
Eight of the top 11 S&P 500 sectors advanced with energy stocks leading gains, up 1.7%.