Banks give US stocks a boost
US stocks climbed again on Wednesday as quarterly results from JPMorgan Chase gave banks a big lift.
Economic news from China powered industrial and technology companies in the US and stock exchanges overseas.
JPMorgan Chase, the largest bank in the US, led a rally in financial stocks after its first-quarter results came in better than analysts expected. Railroad operators and car parts suppliers also gained ground, while consumer goods makers struggled. Gains over the last two days have brought stocks to their highest levels of 2016.
The Dow Jones industrial average jumped 187.03 points, or 1.1%, to 17,908.28. The Standard & Poor's 500 index rose 20.70 points, or 1% to 2,082.42. The Nasdaq composite index advanced 75.33 points, or 1.6%, to 4,947.42.
JPMorgan, the largest bank in the US and the first to report its earnings, said its first-quarter profit fell because of weak results in its investment banking business. Its profit and revenue were bigger than analysts expected, however, and the stock rose 2.51 dollars, or 4.2%, to 61.79 dollars. Bank of America picked up 52 cents, or 3.9%, to 13.79 dollars and Wells Fargo rose 1.26 dollars, or 2.65, to 49.03 dollars. Citigroup jumped 2.35 dollars, or 5.6%, to 44.25 dollars.
Banks have slumped this year because investors are worried they will take big losses on loans to energy companies, which did hurt JPMorgan's results. Low interest rates are also affecting bank stocks because they reduce the profits banks can make on loans.
Railroad operator CSX gained 1.04 dollars, or 4.2%, to 26.03 dollars. The company's profit fell as demand for coal got weaker and CSX hauled less freight, but expenses fell, partly because fuel costs dropped. CSX said it plans to cut more spending.
Other railroad stocks surged. Union Pacific added 2.08 dollars, or 2.6%, to 81.72 dollars and Norfolk Southern rose 2.42 dollars, or 3.1%, to 81.14 dollars.
Industrial stocks and tech stocks rose on reports that exports from China grew 11.5% in March compared with a year earlier. That was the first annual gain since June, and it's a sign of life from China's slowing economy. Heavy equipment maker Caterpillar rose 3.03 dollars, or 4% to 79.13 dollars and engine maker Cummins climbed 5.90 dollars, or 5.5%, to 113.70 dollars.
While the long-beleaguered banking sector traded higher, the best-performing parts of the market so far this year, utilities and telecommunications companies, traded lower.
Consumer goods makers also fell. The Commerce Department said retail sales fell a little in March, although the Federal Reserve said overall consumer spending grew a bit in February and March. Americans have been cautious about their spending this year even though gas prices are low and jobs are growing. Tobacco company Reynolds American lost 2.11 dollars, or 4.1%, to 49.15 dollars and Altria fell 1.75 dollars, or 2.7%, to 62.07 dollars.
France's CAC 40 rose 3.3% and Germany's DAX added 2.7%. The FTSE 100 in Britain rose 1.9%. Japan's benchmark Nikkei 225 added 2.8% and Hong Kong's Hang Seng gained 3.2%.