Wall Street jumps after BofA results, UK reversal

Wall Street jumps after BofA results, UK reversal
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  • Bank of America, BNY benefit from rising interest rates
  • Growth stocks rise when government bond yields fall
  • Goldman Sachs updates report on major corporate overhaul
  • Dow up 1.95%, S&P 500 up 2.76%, Nasdaq up 3.53%

Oct 17 (Reuters) – US stocks rallied on Monday after Britain changed course on an economic plan, while Bank of America became the latest financial firm to report solid quarterly results, fueling optimism for the corporate earnings season increased.

Great Britain named Jeremy Hunt Minister of Financeand he immediately many expelled Prime Minister Liz Truss’ fiscal measures that have unsettled markets in recent weeks.

“Britain is completely backing out of that plan and they probably put that Jeremy Hunt in it as an adult,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

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“Whatever they were doing over there, that Jeremy Hunt guy, he saved the day.”

Bank of America Corp (BAC.N) increased by 6.09% than that of the lender interest income was bolstered by rising interest rates during the quarter, although it added $378 million to its loan loss reserves to shore up against a slowing economy.

Fellow Financial Bank of NY Mellon Corp (BK.N) also benefited from higher interest rates and its shares rose 5.23%.

Overall, higher interest rates increased interest income for Lenders in the third quarter, giving investors hope that the current earnings season will be better than feared. Earnings growth estimate for the quarter comes in at 3%, according to Refinitiv data, compared to 4.5% at the start of the month and 11.1% on July 1st.

The S&P 500 banking index (.SPXBK) rose 3.50%. All 11 S&P 500 sector indices were higher on technology (.SPLRCT)communication services (.SPLRCL) and consumer goods (.SPLRCD) Profit between 3% and 4%.

The Dow Jones Industrial Average (.DJI) rose 578.17 points, or 1.95%, to 30,213, the S&P 500 (.SPX) rose 98.9 points, or 2.76%, to 3,681.97 and the Nasdaq Composite (.IXIC) added 364.16 points, or 3.53%, to 10,685.55.

US stocks remain in a bear market after struggling in September, a historically difficult month. Analysts said stock prices could continue to rise, pointing to better stock valuations coming at a traditionally stronger time for stocks. However, aggressive rate hikes by the US Federal Reserve could be a stumbling block.

“A lot of this rally is some sort of massive undervaluation that happened as the Fed started raising rates, which is some kind of relaxation, which makes me think what kind of legs this rally really has and if the market is really taking off and can perform beautifully if the Fed stays in tightening mode,” Massocca said.

New York-area manufacturing data came in weaker than expected, adding to expectations that the Fed is about to turn around.

Goldman Sachs stock (GS.N)which is due to release results on Tuesday, rose 1.97% after reports of a plan to combine its investment banking and trading businesses. Continue reading

Big megacap growth stocks like Apple Inc (AAPL.O)Meta Platforms Inc (META.O) (AMZN.O) and Tesla Inc (TSLA.O) moved higher than the benchmark 10-year return and fell for the first time in three days after the UK trend reversal.

The S&P 500 growth index (.IGX) gained 3.57%,

Tesla Inc (TSLA.O)Netflix (NFLX.O) and Johnson&Johnson (JNJ.N) They are also expected to report results later in the week.

Rising issues predominated on the NYSE at a 5.57 to 1 ratio; on the Nasdaq, and the 3.14 to 1 ratio favored movers.

The S&P 500 posted no new 52-week highs and 2 new lows; the Nasdaq Composite posted 65 new highs and 122 new lows.

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Reporting by Chuck Mikolajczak; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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