Wall Street’s main indexes opened higher on Monday, following better-than-expected results from Bank of America, which were weighed down by the Federal Reserve’s sharp rate hike. BofA rose nearly 5% after reporting earnings that beat forecasts.
The S&P 500 jumped 2.5% earlier today, while the Dow Jones Industrial Average climbed 2% and the Nasdaq 3%.
Bank of America Corp grew 4.53% as the lender benefited from higher net interest income in its third quarter, even as it added $378 million to its debt-loss reserves.
“BAC benefited from a higher interest rate environment in both the return on newly issued loans and increased number of depositors,” said Siddharth Singhai, chief investment officer at New York-based investment firm Ironhold Capital.
“This is a direct result of higher interest rates offered by banks that look very attractive as compared to other risk assets. Lending will slow significantly in the coming quarters, so better reserve ratios will support them from the steep fall in demand.”
Bank of NY Mellon Corp. also benefited from higher rates, with its shares rising 5.64%.
US stocks set for a short-term rally
US stocks are poised for a short-term rally in the absence of capitalization or an official slowdown in earnings, Morgan Stanley’s long-term stock market sentiment says. As strategist Michael J. Wilson wrote, the S&P 500’s 25% drop this year has left it testing a “critical floor of support” that could lead to a technical correction.
Wilson said he “won’t rule out” the S&P 500 rising to around 4,150 points — pointing to a 16% up move from its latest close. “While this sounds like a huge move, it will be in line with the bear market rallies this year and the former ones,” he said, maintaining his overall negative long-term stance on equities.
“Extremely oversold conditions in the stock market could be the catalyst for a modest rally before the end of the year,” said John Stoltzfus, chief investment strategist at Oppenheimer.
According to respondents to the latest MLIV Pulse survey, US stocks and bonds will lead the way out of the current wave of market turmoil.
Goldman Sachs will declare the result tomorrow
Shares of Goldman Sachs rose 2.23% following reports of plans to combine its investment banking and trading businesses.
Major megacap growth stocks such as Apple, Meta Platforms, Amazon.com and Tesla added about 3% and 4% each as yields on US 10-year bonds retreated from multi-year highs.
Tesla, Netflix and Johnson & Johnson are also expected to report results at the end of the week.
Analysts now expect S&P 500 firms’ profits to rise just 3.6% from a year ago, according to Refinitiv data, much lower than the 11.1% growth expected in early July.
The S&P 500 and Nasdaq marked their fourth weekly loss in five on Friday, after data showed little signs that inflation was cooling, prompting traders in the prospect of a 1% hike in the November rate-setting move by the US Federal Reserve. Inspired to start the assessment. meeting.
catch all business News, market news, today’s fresh news events and breaking news Updates on Live Mint. download mint news app To get daily market updates.