Bank stocks key rally on Wall Street
Trump moves to ax Dodd-Frank
Financial stocks rallied yesterday after a strong payrolls report and President Donald Trump forged ahead with campaign promises to cut industry regulations by ordering reviews of major banking rules implemented in the wake of the 2008 financial crisis.
The S&P 500 closed just below a record high, gaining 16.57 points to finish the day at 2,297.42 — within a point of its all-time closing record set Jan. 25. The S&P financial sector climbed 2 percent for its best day since mid-November, after Trump’s signing of an executive order to scale back banking regulations including the Dodd-Frank law.
JP Morgan Chase shares closed up 3.1 percent at $87.18 as the biggest boost to the S&P 500 and helped push up the S&P bank index by 2.6 percent. The financial sector has rocketed up more than 18 percent since the Nov. 8 U.S. presidential election, while the bank sector has surged more than 25 percent on expectations Trump would scale back regulations.
The Dow Jones industrial average was up 0.94 percent to close at 20,071.46 yesterday. The Nasdaq Composite Index hit an alltime high, advancing 0.5 percent.
Equities got a lift from U.S. Labor Department data showing employers added the most workers in four months, boosting enthusiasm in the economy that had been dampened by hourly earnings numbers, which reflected the weakest year-over-year growth since August at 2.5 percent. The U.S. public and private sectors created 227,000 jobs last month, far more than the 175,000 economists had expected. The unemployment rate ticked up to 4.8 percent, while average hourly wages grew only 0.1 percent, which is likely to keep the Federal Reserve on a gradual path to raise U.S. interest rates.
“The key to the payroll number was wage growth — that takes March off the calendar (for a rate hike),” said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco. “The Dodd-Frank thing wasn’t unexpected, but it happened, and it is clear the direction (that Trump) is moving in, and that added to it.”
Investors continue to monitor corporate earnings. With more than half of S&P 500 companies having reported, profits are beating expectations by an average of 3.3 percent, even as revenue figures fall in line with analyst projections. Earnings are up 5.5 percent on average, with eight of 11 industry groups posting gains.