U.S. Stocks Led Higher by Financial Companies

By Amrith Ramkumar and Riva Gold 

Shares of financial companies led U.S. stocks higher Wednesday, as major indexes rebounded from their worst session in weeks.

The Dow Jones Industrial Average rose 153 points, or 0.7%, to 21464, as gains in J.P. Morgan Chase & Co., Caterpillar and Goldman Sachs Group and put the blue-chip index on course for its biggest gain since April. The S&P 500 rose 0.9% and the Nasdaq Composite climbed 1.3%.

A day earlier, the Dow industrials and S&P 500 posted their biggest declines in more than a month. Some investors and analysts said Senate Republicans' decision Tuesday to postpone a vote on their health-care bill cast doubt on the chances for tax cuts and infrastructure spending, weighing on the market.

However, some said the pullback was a chance to snap up stocks, which have been rising this year with help from improved corporate earnings.

"Nothing about the economy and the makeup of the market has changed, so people are viewing this as the only opportunity they get to jump in and commit some capital," said Michael Antonelli, equity sales trader at brokerage Robert W. Baird & Co.

Wednesday's rally was broad.

Technology shares rebounded and were recently up 1.1% in the S&P 500. Tech has been the index's best-performing sector this year, but is down this month.

"Everybody remembers the [year] 2000 slipping of the tech sector," said Jae Yoon, chief investment officer at New York Life Investment Management. "But I have no concerns about tech valuations," he said, noting that in terms of price-to-earnings metrics, the sector is trading much closer in line to the S&P 500 than it did at its peak.

Financial stocks rose 1.6% in the S&P 500, with Bank of America adding 2.8%. The bank is expected to get a stress-test result from the Federal Reserve that will let it increase its dividend payout to shareholders. Wells Fargo & Co. and J.P. Morgan Chase were also up more than 2%.

Financial shares have also been supported recently from upticks in bond yields, which should help banks' net-interest margins, a key measure of lending profitability.

The yield on the 10-year Treasury note was recently 2.224%, according to Tradeweb, compared with 2.198% Tuesday. Yields rise as prices fall.

The bond market was choppy as media reports suggested investors were reading too much into a Tuesday speech by European Central Bank President Mario Draghi, which many interpreted as suggesting that the bank might start winding down its stimulus program.

Also Wednesday, Bank of England Gov. Mark Carney said interest rates in the U.K. may need to rise if the economy keeps improving. The pound jumped 0.9% to $1.2934, weighing on the export-heavy FTSE 100, which fell 0.6%. The Stoxx Europe 600 was little changed.

Elsewhere, Japan's Nikkei Stock Average fell 0.5%.

Write to Riva Gold at [e-mail]

(END) Dow Jones Newswires

June 28, 2017 14:55 ET (18:55 GMT)

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