Stocks Hit 2016 Highs, Fueled By Financial-Sector Momentum
U.S. equity markets were propelled solidly higher on Wednesday thanks to momentum from the financial and technology sectors.
The Dow Jones Industrial Average gained 187 points, or 1.06% to 17908. The S&P 500 added 20 points, or 1%, to 2082, while the Nasdaq Composite jumped 75 points, or 1.35% to 4947.
The S&P 500 financials, technology, and industrials sectors led seven out of the 10 sectors into positive territory.
Wall Street’s major averages closed at their highest levels of the year on Wednesday, helped by a big quarterly earnings beat from the nation’s biggest bank by assets; JPMorgan (NYSE:JPM).
The Dow notched its highest level since November, up 197 points at its peak on the session, just 82 points away from the psychologically-signficant 18,000 level. Over the last two sessions, the index gained 2%, the biggest two-day gain in five weeks.
JPMorgan Chase CEO Jamie Dimon beat lowered forecasts on Wednesday for the bank's first-quarter earnings results. The bank revealed its first profit decline in five quarters, but investors sent the stock up 4.2% on the session as they focused on the brighter spots of the first three months of the year. The bank revealed lower costs, and better-than-expected trading revenue during the period, though it also saw a drop in investment-banking fees.
The results propelled the bank’s shares to their highest close since January 6, though the stock is down 6.42% so far this year after the markets saw the worst start to a new year ever.
JPMorgan was the first of the big banks to report earnings results. On tap for Thursday morning are Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC) followed by Citigroup (NYSE:C) on Friday. Goldman Sachs and Morgan Stanley will reveal their 1Q results next week.
Better-than-expected trade data out of China also helped give U.S. stocks momentum Wednesday.
IG market analyst Joshua Mahony, in a note, wrote data showed Chinese exports expanded, which helped give commodities stocks a boost.
“For the commodities rout to be over, a resurgent China is required, and the impressive trade data released overnight provided exactly the assurance we were looking for,” he said.
Though he warned while it might be too soon to say the worst is over in China, the revival in exports helped restore investor confidence.
Metals were mostly mixed on the session as silver and copper ended higher, while gold slid 1% as the risk-on trade took over on Wall Street.
Oil prices, meanwhile, were dented by concerns a meeting taking place in Doha, Qatar on Sunday might not yield the production freeze on the commodity many are expecting from some of the world’s biggest producers. Reuters reported Russia’s oil minister said, in a closed-door meeting, that an agreement on a freeze would be loosely framed and few detailed commitments would be outlined.
West Texas Intermediate crude prices dropped 0.97% on the session to $41.76, while Brent, the international benchmark, shed 1.14% to $4.18. The moves were in sharp contrast to gains of more than 4% notched in the prior session.
Inventories data from the Energy Information Administration also added to the bearish sentiment around the commodity. Data showed crude stockpiles jumped by 6.6 million barrels a day.
Meanwhile, investors shrugged off weaker-than-expected economic data out of the U.S. The Commerce Department reported retail sales dipped 0.3% last month, more than the 0.1% rise that had been expected. Stripping out the volatile autos component, prices rose 0.2%, but it was below the 0.4% increase expected.
Prices at the wholesale level also unexpectedly declined in March, falling 0.1%, compared to forecasts for a 0.2% rise. Excluding food and energy prices, producer prices fell 0.1%.