Wall Street gains with economic hopes; bank stocks jump

By Caroline Valetkevitch (Reuters) - U.S.

Reuters May 28, 2020 02:06:24 IST
Wall Street gains with economic hopes; bank stocks jump

Wall Street gains with economic hopes bank stocks jump

By Caroline Valetkevitch

(Reuters) - U.S. stocks rose on Wednesday, with the S&P 500 closing above 3,000 for the first time since March 5, as the further easing of lockdowns lifted optimism for an economic recovery.

Bank stocks powered the day's advance, with the S&P 500 financial index <.SPSY> leading gains among S&P 500 sectors.

Shares of JPMorgan Chase & Co jumped for a second day and led the gains in the financial index. The bank's chief executive, Jamie Dimon, said Tuesday he expects JPMorgan will boost its credit reserves again in the second quarter, but said there are signs the economy is regaining its footing.

Continued easing of lockdowns, optimism about an eventual COVID-19 vaccine and massive U.S. stimulus have been driving the market's recent gains.

"It's all about liquidity and the hopes that the economy will eventually do well," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"The rally will continue, but I don't think it will continue without pullbacks," he said, noting that weak second-quarter earnings could give investors a "reality check."

Tech-related shares underperformed the broader market on Wednesday after leading the recent rally.

Unofficially, the Dow Jones Industrial Average <.DJI> rose 553.16 points, or 2.21%, to 25,548.27, the S&P 500 <.SPX> gained 44.36 points, or 1.48%, to 3,036.13 and the Nasdaq Composite <.IXIC> added 72.14 points, or 0.77%, to 9,412.36.

But amid the recent gains, U.S. tensions with China have cast a cloud on markets.

President Donald Trump said Tuesday that Washington would announce its response to China's planned national security legislation on Hong Kong before the end of the week. U.S. Secretary of State Mike Pompeo said Wednesday that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, potentially a big blow to its status as a major financial hub.

Tech stock are among the most sensitive to Chinese growth, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.

"If the market is going to go higher from here, you're going to have to have broader participation, but you are going to need those large-cap tech companies to be along for the ride, because they make up such a large portion of the benchmark," Samana said.

Also on Wednesday, a Federal Reserve report showed that U.S. businesses continued to be hammered by the effects of the novel coronavirus epidemic into the middle of May.

(Reporting by Caroline Valetkevitch; Additional reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Leslie Adler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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