Tuesday was the best day of the year on Wall Street, sending the three major stock averages to multi-year highs.
The Dow Jones Industrials climbed 218 points, closing at 13177, the best level since New Year’s Eve 2007. Meanwhile, the Nasdaq surged 56 points to 3039, its highest level since November of 2000, and the S&P 500 rose 25 points to 1396, its best level since June of 2008.
The Dow and the S&P 500 have been higher for five days in a row, and all three major averages are poised to open higher this morning, albeit modestly.
The banks are in focus following the release of the Federal Reserve stress-test results last night; and after an incredible run up yesterday -- with the S&P Banking Index higher by 5% -- many financials, including Citigroup (NYSE:C), MetLife (NYSE:MET), and JPMorgan Chase (NYSE:JPM), are selling off in the pre-market.
The Fed put 19 of the biggest banks in the U.S. under a hypothetical market collapse scenario, trying to determine if they could withstand a financial crisis much more severe than in 2008. In the end, 15 banks passed and four failed - Citi, Ally, MetLife and SunTrust (NYSE:STI). Now -- without little hope for returning capital to shareholders this year -- those four banks run the risk of falling behind. Some analysts say potential mergers or asset sales could be coming to boost capital.
The U.S., the European Union, and Japan have filed a complaint with the World Trade Organization charging that China is limiting its exports of rare earths, minerals that are vital to the production of flat panel TVs, cell phones, and hybrid cars.
China produces 97% of the world’s rare earths. The U.S. says its export restrictions and harsh quotas hurt American manufacturers and result in higher prices for American consumers in the end. China has the opportunity to dispute the filings with the WTO, and if no resolution is reached in about two months, there is the possibility for trade sanctions against China.