Stocks shrug off gloomy data amid rebound in banks
U.S. stocks rebounded as a rally in beaten-down industries outweighed pessimism over bleak economic data and trade tensions.
In a very volatile session, banks led gains in the S&P 500 as Wells Fargo, JPMorgan and Bank of America jumped at least 4%. Energy shares joined a surge in crude. Both industries are still the worst performers this year -- tumbling more than 30%. The Dow Jones industrial average outperformed major benchmarks as American Express and Cisco Systems jumped. Treasurys rose.
Earlier losses in stocks were driven by weak U.S. jobless claims and as President Donald Trump said he doesn't want to talk to his Chinese counterpart Xi Jinping right now. While caution still prevails, some traders may be buying the dip after a sell-off that put the S&P 500 on pace for its worst week since March 20 -- or just before the start of a furious stock rally.
"We've had another day of bad news with jobless claims today," said Matt Maley, chief market strategist at Miller Tabak. "In the last two months, we bounced back every time we pulled back like this and people don't want to get too aggressive on the sell-side."
Shares of U.S. banks have become so weak by comparison with technology stocks that a turning point is coming soon, Jonathan Krinsky, chief market technician at Bay Crest Partners LLC, wrote in a report Wednesday.
He cited the ratio between the KBW Bank Index and the Nasdaq 100, which closed at record lows the past two days. Wednesday's ratio was 39% below the average for the past 200 trading days, according to data compiled by Bloomberg. The historically large gap shows "we are in the ballpark" for a swing toward banks, Krinsky wrote.
Elsewhere, oil rose as Saudi Aramco slashed its sales to key buyers and the IEA said that the market is showing signs of improving.
These are some of the main moves in markets:
Stocks
- The S&P 500 rose 1.2% as of 4 p.m. EDT.
- The Stoxx Europe 600 Index decreased 2.2%.
- The MSCI Asia Pacific Index decreased 1.5%.
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%.
- The euro decreased 0.2% to $1.0801.
- The Japanese yen weakened 0.3% to 107.31 per dollar.
Bonds
- The yield on 10-year Treasurys declined three basis points to 0.63%.
- Germany's 10-year yield decreased one basis point to -0.54%.
- Britain's 10-year yield fell less than one basis point to 0.204%.
Commodities
- The Bloomberg Commodity Index rose 1.1%.
- West Texas Intermediate crude gained 9.3% to $27.64 a barrel.
- Gold rose 1.3% to $1,739.30 an ounce.
