Friday, 13 March 2015 03:46
NEW YORK: US stocks rose in a broad rally on Thursday, bouncing back from two days of losses, helped by a weaker dollar that eased worries about corporate profits and tempered the outlook on the timing of a rate increase by the Federal Reserve.
The day’s gains lifted the Dow and S&P 500 back into positive territory for the year so far.
Banking shares rallied in the wake of the Federal Reserve’s annual check-up on the industry’s health. The S&P financial sector rose 2.2 percent and was the day’s biggest gainer. A weak outlook from Intel, however, limited gains in the tech sector.
Retail sales unexpectedly dropped for a third month in February, which helped the euro rebound from a 12-year low versus the dollar. That pause in the dollar’s recent rally helped ease worries about corporate profits and the Fed’s rate outlook.
“It shows the market is still focused on the FOMC meeting next week, and it’s going to be the deal maker or deal breaker based on how their language is nuanced,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
“To me, it shows maybe that moving the rate increase closer has potential fallout with regard to the ever-stronger U.S. dollar, and that’s a headwind for growth and a headwind for earnings for a lot of companies that do business outside the U.S.”
The Dow Jones industrial average rose 259.83 points, or 1.47 percent, to 17,895.22, the S&P 500 gained 25.71 points, or 1.26 percent, to 2,065.95 and the Nasdaq Composite added 43.35 points, or 0.89 percent, to 4,893.29.
The rally only represented a partial rebound after a recent bout of weakness, which has left the S&P 500 down 2.4 percent from its March 2 record closing high.
The weakness has largely been driven by concerns the Fed could raise rates as early as June.
Citigroup passed in the Fed review, allowing it to raise payouts and sending shares up 3.3 percent to $ 54.08. Bank of America was told to get a better grip on internal controls and its data models; shares slipped 0.1 percent to $ 16.09.
Intel Corp slashed its first-quarter revenue forecast, citing lower-than-expected demand for business PCs and lower inventory levels across the PC supply chain. Shares of the Dow component fell 4.7 percent to $ 30.80 and limited the Nasdaq’s advance.
Advancing issues outnumbered declining ones on the NYSE by 2,241 to 823, for a 2.72-to-1 ratio; on the Nasdaq, 1,982 issues rose and 765 fell, a 2.59-to-1 ratio.
The S&P 500 index posted 22 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 136 new highs and 73 new lows.
Copyright Reuters, 2015
