RTRS: US STOCKS-Wells Fargo, banks ignite Wall Street
U.S. stocks jumped on Thursday as Wells Fargo (WFC.N) gave preliminary first-quarter results that were stronger than expected, providing relief to the troubled financial sector.
Wells Fargo shares jumped nearly 25 percent to $18.56 after the bank said that it expects to report a record $3 billion in net income for the first quarter. For more, see [ID:nN09260398]
The health of banks has been a crucial factor behind the stock market's sentiment and the news followed hard upon a New York Times report that all 19 banks undergoing the government's "stress tests" will pass, although many of the largest lenders will probably need to be bailed out again. [ID:nSP434885]
Shares of JP Morgan Chase (JPM.N) rose nearly 12 percent to $30.72 the top performer on the Dow while Bank of America (BAC.N) surged 18 percent to $8.33. The KBW Bank index .BKXjumped 10.8 percent. The index is on track for its longest weekly winning streak since Fall 2006.
"Bank earnings are likely to positively surprise and this is just the first example," said Tim Ghriskey Chief investment officer of Solaris Asset Management in Bedford Hills, New York.
"The margins are huge in a lot of different products because they are acquiring money so cheaply and they are still lending it out at pretty high rates."
The Dow Jones industrial average .DJI gained 194.97 points, or 2.49 percent, to 8,032.08. The Standard & Poor's 500 Index .SPX gained 23.57 points, or 2.86 percent, to 848.73. The Nasdaq Composite Index .IXIC gained 48.41 points, or 3.04 percent, to 1,639.07.
A bigger than expected drop in initial jobless claims, to 654,000, also contributed to the rise in stocks. For more see [ID:nN09264257]
A government report showed the U.S. trade deficit shrank by 28.3 percent in February to its smallest since November 1999 as imports tumbled and exports managed to grow slightly in the face of shrinking global demand. [ID:nN08540259]
Retailers are also in focus as they report monthly sales results for March. Dow component Wal-Mart (WMT.N) reported a lower-than-expected 1.4 percent rise in U.S. stores open at least a year but forecast quarterly earnings at the high end of its prior view.
