Wall Street surges as banks, tech stocks spark rebound

Markets Reuters

Traders Gregory Rowe, left, and William Lawrence work on the floor of the New York Stock Exchange, Tuesday, May 23, 2017. Stocks are opening slightly higher on Wall Street as technology companies post more gains. (AP Photo/Richard Drew) (AP)

Wall Street rallied sharply on Wednesday, with the S&P 500 scoring its biggest one-day percentage gain in about two months, as financial and tech stocks led a broad market rebound.

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The Nasdaq posted its best session since Nov. 7, the day before the U.S. presidential election.

The benchmark S&P had suffered its biggest one-day drop in about six weeks on Tuesday after a healthcare bill was delayed in the U.S. Senate.

The healthcare legislation is the first major plank of President Trump's domestic policy agenda, with investors eager for him to move onto his other plans including tax cuts, infrastructure spending and deregulation.

Investors may be reevaluating the impact of the Senate's delay on the market and Trump's agenda, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

"The market has had trouble really appreciating, but it has had even more trouble declining," Meckler said. "It seems like any negative period is very quickly met with new buyers."

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"Interest rates are still very low and a lot of investors see little opportunity to invest anywhere but in stocks," he added.

The Dow Jones Industrial Average <.DJI> rose 143.95 points, or 0.68 percent, to 21,454.61, the S&P 500 <.SPX> gained 21.31 points, or 0.88 percent, to 2,440.69 and the Nasdaq Composite <.IXIC> added 87.79 points, or 1.43 percent, to 6,234.41.

The small-cap Russell 2000 <.RUT> ended up 1.6 percent.

Financials <.SPSY> were the best performing S&P sector, rising 1.6 percent.

Bank stocks including JP Morgan Chase <JPM.N> and Bank of America <BAC.N> helped boost the S&P 500, both rising more than 2 percent. The interest rate-sensitive group was helped by an increase in yields for 10-year Treasuries and by a widening spread between shorter- and longer-dated U.S. bonds.

"We have had the statements from various Fed officials that they are still on board with the tightening cycle and that has been a big driver for finance names," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

The stocks were also rising ahead of stress test results expected from the Federal Reserve that could pave the way for the banks to return more capital to shareholders.

Tech stocks <.SPLRCT> gained 1.3 percent, surging back from their worst day in more than two weeks. The sector has led the S&P 500's 9-percent gain this year, but has pulled back recently as some investors question whether the group is too expensive.

The tech-heavy Nasdaq bounced off its 50-day moving average.

With second-quarter corporate earnings set to begin in earnest, investors are looking for results to support equity valuations. The S&P 500 is trading at nearly 18 times forward earnings estimates, well above its long-term average of 15 times.

In earnings news, General Mills <GIS.N> shares rose 1.6 percent after the Cheerios cereal maker reported a better-than-expected quarterly profit.

Staples <SPLS.O> shares rose 8.4 percent. The company will announce its sale to private equity firm Sycamore Partners, a person familiar with the matter said on condition of anonymity.

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Advancing issues outnumbered declining ones on the NYSE by a 3.18-to-1 ratio; on Nasdaq, a 3.29-to-1 ratio favored advancers.

About 6.7 billion shares changed hands in U.S. exchanges, below the 7.2 billion daily average over the last 20 sessions.

 

(Additional reporting by Kimberly Chin in New York and Tanya Agrawal in Bengaluru; Editing by Arun Koyyur and Nick Zieminski)

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