Financials, surging commodities lift Wall Street
Stocks rose on Thursday as a brokerage's upbeat view on U.S. banks drove a run-up in financials, while soaring prices of oil and other commodities lifted natural resource companies on bets the economic slump is waning.
RBC Capital Markets upgraded the banking sector, saying it is poised for a multiyear bull market. The KBW bank index <.BKX> added 4.8 percent.
Crude oil prices surged and underpinned the broader market after Goldman Sachs raised its year-end oil price forecast to $85 a barrel, saying economic stabilization and tight supplies should bode well for prices.
U.S. crude settled up 4 percent at $68.81 a barrel on the New York Mercantile Exchange.
The bigger gain in oil, not just today, is encouraging on the macro level. It's indicative of demand, said Cleveland Rueckert, market analyst at Birinyi Associates Inc, in Stamford, Connecticut.
Oil rose on Thursday as U.S. data showing a drop in jobless claims boosted expectations of an economic recovery that could revive energy demand. First-time jobless claims fell for a third straight week and the number of people remaining on the benefit rolls fell for the first time since the start of the year.
But Rueckert said he preferred for oil to hold around $60 barrel. You don't want to have the same thing that happened last year when it ... becomes a burden to a lot of the consumers who are supposed to drive economic growth.
The Dow Jones industrial average <.DJI> gained 74.96 points, or 0.86 percent, to 8,750.24. The Standard & Poor's 500 Index <.SPX> climbed 10.70 points, or 1.15 percent, to 942.46. The Nasdaq Composite Index <.IXIC> rose 24.10 points, or 1.32 percent, to 1,850.02.
A broad run-up in commodities prices lifted shares of basic material companies, with aluminum producer Alcoa Inc
The S&P materials index <.GSPM> gained 2.2 percent, while the gold BUGS index <.HUI> rose 3.3 percent.
Gold futures rose almost 2 percent on Thursday.
In the energy sector, Chevron Corp
The S&P energy index <.GSPE> rose 2 percent.
Shares of Caterpillar Inc
Among bank stocks, Bank of America
Shares of JPMorgan Chase
Brokerages' views on the financial sector are of keen interest to investors, with the government still trying to resuscitate banks and lending to support an economic recovery.
Plane maker Boeing
On the Nasdaq, Apple Inc
While Thursday's economic reports generally supported expectations that the economy is starting to improve, disappointing May sales reported by major retailers showed that consumers are still holding onto their wallets.
Government data showed U.S. non-farm productivity rose by 1.6 percent in the first quarter, much stronger than initially estimated.
Investors are cautious about what Friday's report on U.S. employment might reveal as they look for more definitive signs that the recession that begun in December 2007 is easing. Since hitting a 12-year low on March 9, the S&P 500 has risen nearly 40 percent.
Volume was moderate on the New York Stock Exchange, where about 1.36 billion shares changed hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.50 billion shares were traded, above last year's daily average of 2.28 billion.
Advancers outnumbered decliners on the NYSE by a ratio of about 7 to 2, while on the Nasdaq, about five stocks rose for every 2 that fell.
(Editing by Leslie Adler)
© Copyright Thomson Reuters 2024. All rights reserved.