Wall Street rises after the results of Bank of America and the reversal of the British economy By Reuters


© Reuters. FILE PHOTO: Traders work at the New York Stock Exchange (NYSE) in New York City, US, September 7, 2022. REUTERS/Brendan McDermid/File Photo

By Chuck Mikolajchak

NEW YORK (Reuters) – U.S. stocks began the trading week on Monday with a rally after Britain reversed course over an economic plan, while Bank of America was the latest financial company to report strong quarterly results, raising optimism about corporate earnings season. .

Britain appointed Jeremy Hunt as finance minister, and he promptly dispelled many of the fiscal measures taken by Prime Minister Liz Truss, which have roiled markets in recent weeks.

Shares of Bank of America Corp (NYSE: 6.06%) rose as the lender’s net interest income was boosted by higher interest rates in the quarter, even though it added $378 million to loan loss reserves to support the soft economy.

Fellow New York Bank Mellon Financial (NYSE:Corp) also benefited from higher interest rates, and its shares rose 5.08%.

Overall, higher interest rates boosted lenders’ interest incomes in the third quarter, giving investors hope that the current earnings season may be able to beat a low level of expectations. Earnings growth estimates for the quarter are 3%, according to Refinitiv data, down from 4.5% at the start of the month and 11.1% on July 1.

“In a fragile market like this, any kind of good news in the margins can go a long way,” said Emily Rowland, chief investment strategist at John Hancock Investment Management in Boston.

“There is a better feeling about what is happening in the UK, financial earnings are supported by a number of factors, better net interest margins are one of the key elements, higher rates will be good for banks, so third quarter earnings will probably look a little less bad than feared, On what I put it, it probably isn’t necessarily better than feared.”

The Banks Index is up 3.48%, while each of the 11 major sectors of the S&P 500 Index is up.

The index rose 550.99 points, or 1.86%, to 30,185.82, and the Standard & Poor’s 500 increased 94.88 points, or 2.65%, to 3,677.95 points, and added 354.41 points, or 3.43%, to 10,675.80.

US stocks are still mired in a bear market, after suffering through September, a historically difficult month. Analysts said that to improve stock valuations, entering what is traditionally a stronger period for stocks was also supporting Monday’s rally. However, aggressive Fed rate increases could be a stumbling block.

“Right now, the Fed owns the market, Fed policy is the main driver, and they are implementing the most severe tightening in the shortest amount of time we’ve seen in our generation, and it’s important to remember that Fed policy is working with them,” Rowland said.

Data on manufacturing in the New York region was weaker than expected, adding fuel to expectations that the Fed could be on the horizon.

Shares of Goldman Sachs (NYSE:), which will report results on Tuesday, are up 2.24% following reports of a plan to combine investment and commercial banking.

Shares of huge growth companies like Apple Inc (NASDAQ :), Meta Platforms Inc, Amazon.com (NASDAQ :), and Tesla (NASDAQ :), Inc, helped lift the S&P 500 growth index by 3.42%, the largest daily percentage jump . Since July 27.

Among the companies expected to report results later in the week are Tesla Inc, Netflix (NASDAQ 🙂 and Johnson & Johnson (NYSE:).

Volume on US stock exchanges was 10.65 billion shares compared to an average of 11.52 billion for the full session over the last 20 trading days.

Advance issues outnumbered decliners on the New York Stock Exchange by 4.79 to 1; On Nasdaq, the ratio was 2.98 to 1 in favor of advanced traders.

S&P 500 made no new 52-week highs and 2 new lows; The Nasdaq recorded 83 new highs and 146 new lows.

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