NEW YORK: Wall Street stocks rallied on Wednesday (May 17) on hopes for an agreement to avert a US debt default, while a reassuring update from a midsized bank boosted financial shares.
Although there is still no compromise to lift the nation’s so-called debt ceiling, President Joe Biden said he was “confident” the country would not default, while Republican House Speaker Kevin McCarthy said he was “optimistic about our ability to work together”.
Markets continue to watch the talks.
“We’ve seen that many times before, it always gets resolved,” said LBBW’s Karl Haeling. “But the unknown factor is the politics of the hard-core Republican representatives.”
After opening tepidly, US stocks gained momentum throughout the day. The Dow Jones Industrial Average rose 408.63 points, or 1.24%, to 33,420.77; the S&P 500 gained 48.87 points, or 1.19%, to 4,158.77; and the Nasdaq Composite added 157.51 points, or 1.28%, at 12,500.57.
The gains marked the biggest one-day percentage climb for each of the three major indices since May 5.
Analysts said the market was cheered by an update from Western Alliance Bancorporation, which said it had added US$2 billion in deposits so far in the second quarter.
Worries about deposit flight have slammed regional bank shares since early March. Western Alliance jumped 10.2%, while Zions Bancorporation and Comerica International both won more than 12%.
The KBW regional bank shot up 7.28% to notch its biggest one-day percentage gain since Jan 6, 2021 to close at its highest level since May 1. The S&P 500 banks index also surged 4.46% for its biggest daily percentage gain since Nov. 10.
“It is optimism over the debt ceiling. It is continued optimism the banking crisis is in the rear-view mirror. Every day we go without a new problem, the closer we get to maybe putting it behind us,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“Definitely the catalyst is when you get both Biden and McCarthy to say that we are close the assumption is they probably will go with some kind of agreement.”
Big-box retailer Target added 2.5% as it reported a dip in quarterly earnings, but pointed to progress in cutting excess inventory that has weighed on earnings in a slowing consumer economy. – AFP, Reuters
Source: The Sun Daily
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