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Tuesday 14 August 2018

Banks jump as US stocks post their fourth straight gain

Interest rates rose as bond prices in the US and Europe fell.

The Nasdaq and Russell have set all-time highs each of the last few days (Martin Keene/PA)
The Nasdaq and Russell have set all-time highs each of the last few days (Martin Keene/PA)

By Marley Jay, Associated Press

US stocks rallied for their fourth gain in a row as banks climbed along with bond yields.

On Wall Street there were signs investors were getting a bit less nervous about trade tensions.

Some of the biggest gains went to industries that have lagged the market in the last few months, including financial companies.

Interest rates rose as bond prices in the US and Europe fell.

That can signal higher rates on mortgages and other consumer loans. Bank of America gained more than 3%.

Multinational companies such as Boeing and McDonald’s also rose.

That helped the Dow Jones industrial average make its biggest gain in almost two months.

Worries about international trade disputes have been affecting the market since late February, but Karyn Cavanaugh, senior markets strategist at Voya Investment Management, said investors might have started focusing on the strength of the US economy and continued global growth instead.

“It’s refreshing to see that investors are realising this is an incredibly good economic backdrop and it’s an incredibly good environment for companies to make money,” she said.

“We’re in a sweet spot where we have some growth and low inflation and investors just don’t want to believe it.”

The S&P 500 index added 23.55 points, or 0.9%, to 2772.35.

The Dow rose 346.61 points, or 1.4%, to 25146.39.

The Nasdaq composite rose 51.38 points, or 0.7%, to 7689.24.

The Russell 2000 index of smaller company stocks gained 11.32 points, or 0.7%, to 1675.95.

The Nasdaq and Russell have set all-time highs each of the last few days.

Electric car maker Tesla surged to its biggest gain in two-and-a-half years as investors grow more confident it will meet its production targets for the Model 3 sedan.

Tesla rose 9.7% to 319.50 dollars.

Chairman and chief executive Elon Musk said he expects the company will be able to produce 5,000 Model 3s in a single week by the end of this month.

The Model 3 is Tesla’s attempt to reach the mass market with a less expensive car.

Tesla has struggled to reach that target, and doing so would help the company stem its long-term losses.

Bond prices slipped. The yield on the 10-year Treasury note rose to 2.78% from 2.93%, and JPMorgan Chase climbed 2.3% to 110.36 dollars and Wells Fargo added 2% to 55.58 dollars.

Banks have fallen over the last few months even though long-term interest rates have reached their highest levels in years.

Healthcare and basic materials companies, which are essentially flat over the same period, did better than the rest of the market on Wednesday.

CVS Health rose 2.8% to 65.08 dollars and chemical maker DowDuPont jumped 3.2% to 70.04 dollars.

That did not mean investors were ready to overlook trade issues altogether.

Brown-Forman, the maker of Jack Daniel’s and other liquors, slumped 6.1% to 52.47 dollars.

The company said it has concerns about how trade tensions might affect its business.

On Tuesday, Mexico announced tariffs on bourbon and other US products, and the European Union may place duties on Kentucky bourbon.

The duties are in response to the tariffs on steel and aluminium imports that President Donald Trump imposed last week.

Brown-Forman’s sales fell short of analyst projections while costs connected with the creation of a charitable foundation affected its earnings.

Devon Energy climbed after it said it will sell its interest in two companies for a total of 3.13 billion dollars.

Global Infrastructure Partners will buy its stakes in EnLink Midstream Partners and EnLink Midstream LLC.

Devon increased its stock buyback authorisation and the stock gained 5.6% to 41.51 dollars.

Signet Jewelers soared after the company had a stronger first quarter than Wall Street expected and said there are signs its sales are stabilising.

The company also maintained its annual forecasts.

Signet traded as high as 75 dollars a share in November.

Since then it has reported weak sales, announced more store closings, and dealt with complications from the sale of its credit portfolio.

The stock rose 18.4% to 52.27 dollars on Wednesday.

Athenahealth, a medical billing software company, climbed after it said it is exploring a possible sale.

Investor Elliott Management recently offered about 6.5 billion dollars to take Athenahealth private and said it had grown frustrated with the company’s performance.

The company also said chief executive Jonathan Bush resigned effective immediately.

A few days earlier the New York Post reported that Bush settled a sexual harassment claim with a former employee several years ago.

The stock advanced 4.2% to 157.44 dollars.

Press Association

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