Banks lead gains for stocks on Wall Street in jumpy trading
Financial companies led stocks broadly higher on Wall Street Thursday as traders welcomed news that the Federal Reserve and other regulators are removing some limits on the ability of banks to make investments.
The S&P 500 climbed 1.1% following a jumpy day of trading. At one point, the index was down 0.9% before the rally strengthened toward the end of the day. The gains reversed some of the S&P 500’s losses from a day earlier, when the market had its biggest drop in nearly two weeks.
Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry.
Technology and health care stocks also helped lift the market, outweighing losses in utilities. Bond yields fell, a sign of caution in the market.
The Dow Jones Industrial Average rose 299.66 points, or 1.2%, to 25,745.60. The Nasdaq, which hit an all-time high earlier this week, gained 107.84 points, or 1.1%, to 10,017. The Russell 2000 index of small company stocks notched the biggest gain, climbing 23.57 points, or 1.7%, to 1,413.31.
The S&P 500 added 33.43 points to 3,083.76. The benchmark index is on pace for its best quarter since the fourth quarter of 1998.
Until this week, markets had been mostly rallying on hopes that U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronavirus.
Recent economic data have been positive, helping fuel the cautious optimism. But a rise in new infections is stoking worries that the reopening of businesses may have to be curtailed again, delaying the economy’s recovery.
The Commerce Department said Thursday that the U.S. economy shrank at a 5% rate in the first three months of the year. A far worse decline is expected for the current quarter due to the pandemic. The Labor Department said another 1.5 million laid-off workers applied for unemployment benefits last week. That marks the 12th straight drop, a sign that layoffs are slowing, but remain at a painfully high level.
On a more encouraging note, the government said orders to American factories for big-ticket goods rebounded last month from a steep pullback in April and March as the economy began to slowly reopen.
The mixed data come amid growing alarm over a surge in cases of COVID-19. Hospitalizations and caseloads have hit new highs in over a half-dozen U.S. states, including California, Florida and Texas, where the governor on Thursday said the state would pause its aggressive reopening as it deals with a surge in cases and people in need of being hospitalized. The daily number of confirmed cases in the country closed in on the peak reached in late April.
President Donald Trump had campaigned in 2016 on rolling back what he saw as excessive over-regulation of the banks that had weighed on the economy by preventing the banks from making loans to qualified borrowers.
In energy trading, benchmark U.S. crude oil rose 1.9% to settle at $38.72 a barrel. Brent crude, the international standard, gained 1.8% to $41.05 a barrel.