Wall Street soars as bank stocks rise

Wall Street’s major indices surged as Bank of America led gains among lenders after reporting better-than-expected results buoyed by the Federal Reserve’s rapid rate hikes.

Bank of America Corp rose 4.53% as it benefited from higher net interest income in the third quarter despite adding $378m (A$602m) to its loan loss reserves. did.

“BAC has benefited from the rising interest rate environment, both in yields on new issuance loans and growth in depositors,” said Siddharth Singhai, CIO of Ironhold Capital, a New York-based investment firm. ‘ said.

“This is a direct result of the higher interest rates offered by banks being very attractive compared to other risk assets. Better reserve ratios as lending slows considerably over the next few quarters. will sustain them from a significant drop in demand.”

Bank of NY Mellon Corp also benefited from higher interest rates, with its stock gaining 5.64%.

Overall, higher interest rates boosted lender interest income in the third quarter, but the market turmoil stalled transactions and gave banks more cash to prepare for a slowdown.

The S&P 500 Banks Index rose 3.14%.

All 11 sector indices of the S&P 500 were up, with technology, telecom services and consumer discretion each up nearly 3.0%.

Shares of Goldman Sachs, which reports results on Tuesday, rose 2.23% after reports of plans to combine investment banking and trading operations.

Large-cap growth stocks such as Apple, Meta Platform, Amazon.com and Tesla are up about 3.0% and 4.0%, respectively, as yields on 10-year U.S. Treasury bonds recede from multi-year highs.

Tesla Inc, Netflix and Johnson & Johnson are also expected to report results later this week.

Analysts now expect S&P 500 earnings to rise just 3.6% from a year ago, well below the 11.1% rise expected in early July, according to Refinitiv data. .

In early trading, the Dow Jones Industrial Average rose 585.88 points (1.98%) to 30,220.71, the S&P 500 rose 89.71 points (2.50%) to 3,672.78, and the Nasdaq Composite rose 314.33 points (3.05%). did. Cent, 10,635.72.

The S&P 500 and Nasdaq posted their fourth weekly drop in five weeks on Friday as data showed little sign of easing inflation, with traders pushing 1.0 by the Federal Reserve at the November interest rate-setting meeting. We have begun pricing in the possibility of a rate hike of 10%. .

Fox News’ parent company Fox Corp fell 6.31% after Rupert Murdoch began a process that could reintegrate his media empire, News Corp and Fox said Friday after the company split. revealed 10 years after.

News Corp shares rose 5.4%.

Gainers outnumbered losers by a ratio of 13.90 to 1 on the NYSE and 5.82 to 1 on the Nasdaq.

The S&P index did not hit a 52-week high and posted two new lows, while the Nasdaq posted 46 new highs and 46 new lows.