Bank results lift stocks; Dow up for the seventh consecutive session

  • Bank of America and Morgan Stanley report strong earnings in the second quarter
  • The Dow Jones index achieved seven consecutive sessions of gains
  • Retail sales for June rose 0.2% versus estimates of 0.5%.
  • The Dow Jones rose 1.06%, the Standard & Poor’s 500 0.71%, and the Nasdaq 0.76%.

NEW YORK (Reuters) – U.S. stocks rose on Tuesday, helped in part by a round of strong bank earnings that helped put the Dow Jones on track for its longest daily winning streak in more than two years.

Shares of Morgan Stanley (MS.N) jumped 6.45%, marking the biggest one-day percentage rise since November 9, 2020 after it exceeded expectations as growth in the bank’s wealth management business offset lower trading revenue.

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Bank of America (BAC.N) rose 4.42% after its earnings beat expectations by earning more customer loan payments, while investment banking and trading performed better than expected.

Other banking stocks also rose on Tuesday, with Bank of New York Mellon (BK.N) rising 4.11% and PNC Financial (PNCN) rising 2.51%, after announcing quarterly results.

“It’s surprising. This morning, all the banks reported, they beat earnings expectations and all but PNC beat revenue expectations,” said Tim Gresky, chief portfolio strategist at Ingalls & Snyder in New York.

“I always hate to extrapolate the big banks’ earnings, which are always first, to the rest of the market. We’ve got a lot coming here but earnings estimates have been lowered and banks could surprise.”

The Dow Jones Industrial Average increased 366.58 points, or 1.06%, to 34,951.93 points, the Standard & Poor’s 500 increased 32.19 points, or 0.71%, to 4,554.98 points, and the Nasdaq Composite Index increased 108.69 points, or. 0.76% at 14,353.64.

The Dow Jones index posted gains for the seventh consecutive session, the longest streak since March 2021, and closed at its highest level since April 2022.

Some of the largest US banks such as JP Morgan (JPM.N) last week pointed to increased profits from higher interest rates and indicated that the economy remains resilient.

The S&P 500 Banking Index (.SPXBK) finished 1.90% stronger at 317.02, its highest close since March 8, when the onset of the small banking crisis triggered a sharp sell-off in the sector. The KBW Regional Banking Index (.KRX) also rose 4.10% to 96.25, its highest close since March 21.

Charles Schwab (SCHW.N) jumped 12.57%, the best performer on the S&P 500, after the company reported a smaller-than-expected drop in quarterly profit.

The best performing sector was Technology (.SPLRCT), up 1.26%, with Microsoft (MSFT.O) shares gaining 3.98 to a record close of $359.49 after it announced it would charge more for access to new artificial intelligence features in its Office program.

Stocks have been rallying recently, with the S&P 500 and Nasdaq climbing to 15-month highs on data showing economic resilience, slowing inflation and a solid labor market.

Data released early on Tuesday showed retail sales rose less-than-expected in June due to a decline in building materials and service station revenue, although consumers boosted or maintained their spending levels. In addition, production at domestic plants unexpectedly fell during the month, but picked up in the second quarter as auto production accelerated.

UnitedHealth (UN.N) also boosted the Dow Jones index, rising 3.29%, adding about 105 points to the upside, after Bernstein upgraded the health insurance company to an “outperforming” rating.

Trading volume on US exchanges reached 10.54 billion shares, compared to an average of 10.58 billion shares for the full session over the last 20 trading days.

Advances outnumbered losers on the New York Stock Exchange by a ratio of 2.76 to 1; On the Nasdaq, the ratio of 1.62 to 1 favored the highs.

The S&P 500 posted 53 new highs in 52 weeks and three new lows. The NASDAQ recorded 157 new highs and 75 new lows.

(Reporting by Chuck Mikolajczak) Editing by Richard Chang

Our standards: Thomson Reuters Trust Principles.

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