Stocks rallied more than 2 percent on
Wednesday, powered by the best day for banks in 16 years as
unexpectedly strong results from Wells Fargo & Co relieved
worry about a credit crisis spiraling out of control.
A $4 drop in oil prices gave more fuel to the rally,
offsetting an early report that showed U.S. consumer prices in
June rose by the most since the aftermath of Hurricane Katrina
in September 2005.
Investors poured into bank stocks, driving Wells Fargo
(WFC.N) up 32.8 percent, while shares of rivals like Citigroup
(C.N), JPMorgan Chase & Co (JPM.N) and Bank of America Corp
(BAC.N) jumped 13 percent or more.
Wells Fargo, the fifth-largest U.S. bank and a big mortgage
lender, also raised its dividend at a time when competitors are
cutting them. That allayed some concerns about financial
companies just days after IndyMac collapsed in one of the
biggest bank failures in U.S. history.
Shares of mortgage finance companies Fannie Mae (FNM.N) and
Freddie Mac (FRE.N), which had lost over 60 percent of their
value since the beginning of the month, were also swept up in
the broad financial rally, surging 30 percent or more. Both
companies got a lift from Federal Reserve Chairman Ben
Bernanke's remarks that they are "in no danger of failing."
"Oil prices came down $4 a barrel and financials went up,
particularly on the Wells Fargo news. One popular trade was to
short financials and long energy and that trade got killed
today," said Brian Gendreau, an investment strategist in New
York for ING Investment Management Americas, which recently
went "neutral" on U.S. stocks.
The Dow Jones industrial average (.DJI) jumped 276.74
points, or 2.52 percent, to 11,239.28, while the Standard &
Poor's 500 Index (.SPX) gained 30.45 points, or 2.51 percent,
to 1,245.36. The Nasdaq Composite Index (.IXIC) shot up 69.14
points, or 3.12 percent, to 2,284.85.
The three indexes had their largest single-day percentage
gain since April 1 and the KBW bank index (.BKX) soared 17.27
percent, its largest one-day percentage gain since it began
tracking in May 1992.
ALTERA CLIMBS, eBAY FALLS LATE
Further boosting the Nasdaq were shares of Altera Corp
(ALTR.O), which jumped 12.1 percent to $21.54 on news the chip
maker's second-quarter revenue rose more than analysts
expected.
But technology shares may be under pressure on Thursday,
after online auctioneer eBay Inc (EBAY.O) forecast a weak third
quarter, sending its shares down about 7 percent to $26.20 in
after-hours trade. On the Nasdaq, had closed at $28.10, up
4.5 percent.
U.S. crude prices for August delivery fell $4.14 to
settle at $134.60 per barrel, a slump of over $10 since
Monday's close, hurting shares of energy companies such as
Chevron (CVX.N), down 3.4 percent at $86.39, and Exxon Mobil
(XOM.N), down 1.7 percent at $80.81.
Lower oil prices boosted the airline sector, however,
pushing the airline stock index (.XAL) up 18.1 percent.
Shares of retailers also gained because any reduction in
energy costs would ease the strain on consumers, who have been
struggling with high gasoline prices. The S&P retail index
(.RLX) leaped 5.5 percent. On the Nasdaq, shares of Internet
retailer (AMZN.O) climbed 7.2 percent to $71.84.
A Dow Jones index of home builders' shares (.DJUSHB) popped
up 10.3 percent, its biggest advance in four months.
Trading volume was fairly active on the New York Stock
Exchange, with about 1.73 billion shares changing hands, below
last year's estimated daily average of roughly 1.90 billion. On
Nasdaq, about 2.44 billion shares traded, above last year's
daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by about 3 to 1
on both the NYSE and the Nasdaq.
(Additional reporting by Jennifer Ablan; Editing by Jan
Paschal)
Related posts:
- Wall Street soars on Bernanke and easing credit strains (Reuters)
- Wall Street soars 11 percent on bank rescue and Morgan deal (Reuters)
- Wall Street soars on Fannie, Freddie bailout (Reuters)
- Wall St up as earnings offset retail data; Intel soars (Reuters)
- Wall Street soars on tech bets and JPMorgan (Reuters)