Rally Mode: Financials, Health Care Lead Markets Solidly Higher

U.S. equity markets found momentum in the final hours of the session as health care and financial names led the way higher.

The Dow Jones Industrial Average was 217 points higher, or 1.29% to 17142. The S&P 500 gained 29 points, or 1.49% to 2023, while the Nasdaq Composite added 87 points, or 1.82% to 4870.

The financial sector led those in advancement on the session, while materials lagged.

Today’s Markets

In the final few hours of trading, and after wafting around in a wide range throughout most of the session, Wall Street seized momentum. It was enough to turn the major averages positive on the week. The decisive move higher was thanks to a strong showing by the financial and health-care sectors, both popping more than 2%.

Bank stocks including JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) led the Dow’s gainers, while Wal-Mart was once again the biggest loser on the index. The retailer shed 1.7% on the session, far less than the more than 10% plunge it saw on Wednesday. The Nasdaq Biotechnology Index also helped propel the tech-heavy Nasdaq up more than the broader averages. The NBI was up more than 4%.

Goldman Sachs (NYSE: GS) and Citigroup (NYSE:C) reported their results ahead of the bell – and the results were mixed.

Goldman, the nation’s biggest investment bank, reported a quarterly profit of $2.90 a share on revenue of $6.86 billion. The results missed expectations for profits of $2.91 a share on revenue of $7.12 billion. The firm said its trading revenue saw a steep decline during the reporting period thanks to drop in fixed income, currency, and commodities business – Goldman said that was caused in part by “challenging market-making conditions.”

Citigroup, meanwhile, revealed a mixed quarter.  The nation’s third-largest bank by assets revealed adjusted profits per share of $1.31, beating estimates for $1.28. Revenue came in at $18.50 billion, slightly missing expectations for $18.54 billion. The firm said the rise in profit came as it also saw a decline in costs.

UnitedHealth (NYSE:UNH) revealed a beat on both lines in the third quarter.

Traders also kept their fingers on the pulse of the Fed, though, after digesting the latest economic figures out ahead of the bell.

“The economy has consistently failed to deliver the type of robust demand profile that makes raising rates inevitable,” Peter Kenny, market strategist, wrote in a note. “That uncertainty, coupled with corporate news, earnings and guidance that speaks to caution has left markets vulnerable to a shake out.”

Indeed, a slew of economic data provided plenty of reading material for traders. Weekly jobless claims dropped to a 1973 low. Claims dropped to 255,000 from a downwardly revised 262,000 the week prior. Expectations were for a rise to 270,000 from an originally reported 263,000.

Consumer price inflation and Empire State manufacturing were also released. The Labor Department reported prices at the consumer level declined 0.2% in September, matching expectations. Excluding the volatile food and energy components, however, prices rose 1.9%, better than the 1.8% gain expected.

CPI is the report traders closely eyed after a disappointing read on producer prices in the prior session – weak inflation data is seen as preventing the Fed from making a decision on rates this year.

IHS Global Insight’s director of consumer economics, Chris Christopher, said looking past the headline CPI numbers, which has been pulled down by the sharp drop in gasoline prices, the Fed has a good argument for hiking rates before the end of the year.

“The Fed can take comfort from the fact that the core CPI (at 1.9% year-over-year) is now almost at its 2% target. This, along with the initial unemployment claims, which are at a 42-year low, will strengthen the arguments for a December Fed rate hike,” Christopher said in a note.

In recent action, the yield on the benchmark 10-year U.S. Treasury Bond rose 0.042% to 2.025%.

Meanwhile, the Empire State manufacturing-activity gauge from the New York Federal Reserve remained deeply rooted in contraction territory during October. The gauge rose to -11.36 for the month from -14.67 in September. Wall Street had anticipated a rise to -8. Readings above 0 point to expansion, while those below indicate contraction.

The Philadelphia Federal Reserve’s gauge of mid-Atlantic manufacturing activity came in much weaker than expected, and showed business conditions remained in contraction in the region. The gauge rose to -4.5 in October from -6 in September, however Wall Street expected a rise to -1.

While traders continue to speculate about when the Fed will hike rates, there’s also another deadline looming: The debt ceiling. Treasury Secretary Jack Lew on Thursday warned the U.S. will likely run out of borrowing authority by November 3, that’s earlier than the November 9 forecast given just days ago.

Lew will join FOX Business’s Liz Claman on ‘Countdown to the Closing Bell’ for an exclusive interview to discuss the debt ceiling and other problems facing the nation at 4:00 p.m.

Elsewhere, in commodities, oil prices steepened their declines after data from the Energy Information Administration showed weekly crude stockpiles surged to 7.56 million barrels. The forecast was for a smaller build to 2.85 billion.  U.S. crude prices fell 0.56% to $46.38 a barrel, while Brent, the international benchmark, declined 0.90% to $48.71.

Metals were higher as gold rose 0.69% to $1,187 a troy ounce. Silver paced 0.20% higher to $16.15 an ounce, while copper saw 0.25% gains to $2.42 a pound.

Overseas, markets in Europe were trading higher after Asia markets capped the session in positive territory. The Euro Stoxx 50, which tracks large-cap companies in the eurozone jumped 1.37%. The German Dax climbed 1.35%, while the French CAC 40 rose 1.37%, and the UK’s FTSE 100 added 1.09%.