Wall Street climbs to the edge of another milestone
NEW YORK — The S&P 500 is threatening to top the 5,000 level for the first time on Wednesday as Ford Motor, Chipotle Mexican Grill and other big stocks climb following their latest earnings reports.
The S&P 500 was up 0.9% in late trading at 4,998 and on track to return to a record. The Dow Jones Industrial Average was 189 points higher, or 0.5%, with a little more than an hour remaining in trading, and the Nasdaq composite was up 1%.
A relatively calm day in the bond market helped keep things smooth for the stock market, despite some concerns about investors’ ability to digest a $42 trillion auction of 10-year Treasurys by the US government.
Underneath the surface, though, were still some very sharp moves. New York Community Bancorp went from an initial gain to a steep loss of 14% and back to a gain of 5.4%. It’s the latest dizzying swing for the bank, which is still down nearly 60% since rattling investors across the industry last week with a surprise loss.
It’s struggling with challenges related to its acquisition of Signature Bank, which was one of the banks that collapsed in last year’s mini-crisis for the industry. But New York Community Bancorp is also feeling pain from a problem dogging banks worldwide: weakness in commercial real estate.
Moody’s downgraded the bank’s credit rating late Wednesday to “junk” status from the lowest tier of investment-grade. Analysts also said they were concerned about the departures of key risk and audit executives for the bank.
New York Community Bancorp’s stock then went on a wild ride in offhours trading, sinking and then rising after the bank said it had increased its deposits and gave details about how much cash it has on hand.
Stocks of other regional banks have been caught up in the drama, to a lesser degree, which has brought back uncomfortable memories of last year’s banking crisis. The KBW Nasdaq Regional Banking index swung from a loss during the day to a gain of 0.1%.
UBS analyst Brody Preston said New York Community Bancorp’s latest quarterly loss and dividend cut are due to problems related specifically to it and “are not necessarily a proverbial canary in the coal mine for other banks in the space.” But attention is likely to remain on potential losses for banks tied to commercial real estate, particularly after Treasury Secretary Janet Yellen recently highlighted them as a concern.
Elsewhere on Wall Street, Chipotle Mexican Grill rose 8.3% after reporting stronger profit and revenue for the latest quarter than analysts expected. Its restaurants sold more meals to customers than they did a year earlier.