NEW YORK: The S&P 500 and Dow rose on Tuesday, shaking off a weak start, as investors digested Federal Reserve Chair Jerome Powell’s comments, while parsing mostly positive third-quarter results from big US banks.
Powell said the US labor market remained mired in its low-hiring, low-firing doldrums through September, though the economy overall “may be on a somewhat firmer trajectory than expected.” He also said the central bank may soon end its balance sheet runoff.
The remarks reassured investors at a time when key economic data remains delayed due to the ongoing government shutdown.
“The bulls remain fully in charge and until that’s shaken with something more significant than these comments from Chair Powell or anything else, that’s likely to be the case into the start of third-quarter tech earnings next week,” said Michael James, equity sales trader at Rosenblatt Securities in Los Angeles.
A slew of major lenders reported solid results on strong performance in the investment banking segment, helping the S&P 500 banking index rise 1.6 percent.
Wells Fargo advanced 7.6 percent and was on track for its best day in six months and Citigroup added 4.3 percent after both lenders beat estimates for third-quarter profit.
JPMorgan Chase raised its full-year forecast for net interest income and Goldman Sachs beat Wall Street expectations for quarterly profit. However, shares of both JPMorgan and Goldman Sachs, which have outperformed most rivals this year, fell 1.4 percent and 1.6 percent.
BlackRock’s hit a record USD13.46 trillion, lifting its shares by 2.2 percent.
“You have a lot of positive momentum in the markets from a technical standpoint, but then fundamentally you have the earnings season going on right now and people are very positive on the US companies’ earnings outlooks,” said Michael Matousek, head trader at US Global Investors.
At 12:58 p.m. the Dow Jones Industrial Average rose 309.37 points, or 0.67 percent, to 46,378.46, the S&P 500 gained 12.63 points, or 0.19 percent, to 6,667.35 and the Nasdaq Composite lost 50.73 points, or 0.22 percent, to 22,643.88.
The S&P 500 tech sector dropped 1.1 percent, with losses in Nvidia and Broadcom weighing on the Nasdaq.
Defensive plays led gains, with consumer staples and utilities adding 1.2 percent each, signaling investors were treading with caution.
Gains in industrials stocks supported the Dow. Caterpillar rose 3.7 percent after J.P. Morgan raised its price target on the stock.
Wall Street kicked off the session lower on concerns over Washington and Beijing’s move to slap tit-for-tat additional port fees on ocean shipping firms.
Global equities were shaken on Friday after Trump threatened 100 percent tariffs on Chinese goods over Beijing’s rare earths curbs, though a softened tone over the weekend helped calm investor nerves and lift markets on Monday.
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