US close: Stocks rise for second day, bank stress tests mixed

US stocks strode higher for the second successive day on Wednesday as the initial panic of Brexit eased and investors sought bargains, while there was mostly top grades for banks in the Federal Reserve's stress-test results after the market closed.

Recouping around half the losses from the two session immediately after the UK's decision to split from the European Union, the Dow Jones Industrial Average gained 284.96 points or 1.64% higher to 17,694.68 by the closing bell, while the S&P 500 rose 1.7% and the Nasdaq Composite climbed 1.86%.

Helping fuel the rise, oil prices continued to claw their way back towards $50 as US weekly crude oil inventories fell more than expected and as strikes by Norwegian oil and gas workers loomed.

The Energy Information Administration said US crude inventories fell 4.1m barrels last week to 526.6m barrels. Analysts had pencilled in a 2.4m drop in barrels. However, the EIA said crude oil inventories are at “historically high levels for this time of year”.

West Texas Intermediate crude accrued more than 3% to $49.35 per barrel and Brent barrelled 2.8% higher to $49.94 as Wall Street headed out the door.

The dollar was also retreating from its closest convergence with sterling in 31 years, down 0.88% to $1.3462, while it also came off for the third successive day versus the euro, down 0.5% to $1.1123.

Meanwhile, US personal income and spending grew as expected in May, pointing to solid growth in household consumption during the second quarter, according to some economists.

Personal incomes increased by 0.2% month-on-month in May following a rise of 0.5% in the month before, alongside a 0.4% jump in consumption, according to the Department of Commerce. Economists had been expecting a rise of 0.3% and 0.4%, respectively.

"US core PCE inflation stayed steady at 1.6% with most eyes now on next week’s US employment report in the hope that last month’s weak jobs report was a one-off," said CMC Markets analyst Michael Hewson.

He added: "The main gains in US markets appear to be being driven by energy stocks as oil prices remain resilient."

The personal income and spending data means second-quarter consumption will now rise at a hefty 4.2% annualised rate even if spending is unchanged in June, said Ian Sheperdson, chief US economist at Pantheon Macroeconomics.

"With a modest 0.2% gain, consumption will be up 4.5%, contributing 3.2% to headline GDP growth. Expect all the tracking models to be revised higher," he said.

Pantheon expects the US Federal Reserve's focus to move away from Brexit back to domestic wages, as the net tightening of financial conditions in the US since the referendum is "just not big enough — indeed, it's nothing like big enough — to justify moving our economic forecasts".

Wednesday's US housing data would be a disappointment for the Fed, however. US pending home sales fell more than expected in May, according to data from the National Association of Realtors (NAR). The NAR’s monthly index declined 3.7% to 110.8 from a downwardly-revised 115.0 in April. This was steeper than the 1.1% drop expected by economists, with all four regions experiencing a cutback in contract activity last month.

Moreover, US mortgage applications fell 2.6% in the week to 24 June compared to a 2.9% increase a week earlier, according to the Mortgage Bankers’ Association.

In company news, big banks including Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and HSBC North America, were among the 30 that passed stress tests with good grades, winning permission from the Fed to pay investors dividends. Morgan Stanley was ordered to address certain weaknesses and resubmit its capital plan by the end of the year.

Notable failures however were the American units of Deutsche Bank and Banco Santander, which were held back for the second year running, as the pair were part of a group of only three out of 33 banks to fail the tests.

Nike was under the cosh after reporting a 2% drop in quarterly profit overnight.

Elsewhere, Monsanto shares climbed as EU antitrust regulators indicated they could open a review of its deal with Bayer.

PrivateBanCorp's jumped after Canadian Imperial Bank of Commerce agreed to buy the company for about $3.8bn.

S&P 500 - Risers
Mallinckrodt Plc Ordinary Shares (MNK) $59.90 +6.53%
Murphy Oil Corp. (MUR) $32.01 +6.42%
Seagate Technology Plc (STX) $23.95 +6.30%
Under Armour Inc. Class A (UA) $39.75 +5.94%
Host Hotels & Resorts Inc. (HST) $16.05 +5.94%
NetApp Inc. (NTAP) $24.47 +5.57%
Transocean Ltd. (RIG) $11.62 +5.25%
Perrigo Company plc (PRGO) $91.55 +4.90%
Weyerhaeuser Co. (WY) $29.23 +4.84%
Hess Corp. (HES) $57.77 +4.77%

S&P 500 - Fallers
Southwestern Energy Co. (SWN) $13.03 -6.19%
EQT Corp. (EQT) $76.96 -2.84%
Alcoa Inc. (AA) $9.10 -2.47%
Cabot Oil & Gas Corp. (COG) $25.39 -2.31%
Endo International Plc (ENDP) $15.93 -1.61%
Range Resources Corp. (RRC) $43.99 -1.19%
Clorox Co. (CLX) $135.21 -1.06%
Dr Pepper Snapple Group Inc. (DPS) $94.08 -0.69%
Alexion Pharmaceuticals Inc. (ALXN) $114.17 -0.67%
NextEra Energy Inc. (NEE) $127.75 -0.55%

Dow Jones I.A - Risers
Nike Inc. (NKE) $55.13 +3.84%
American Express Co. (AXP) $59.63 +2.99%
JP Morgan Chase & Co. (JPM) $61.20 +2.82%
Merck & Co. Inc. (MRK) $57.05 +2.64%
Boeing Co. (BA) $126.99 +2.50%
Intel Corp. (INTC) $31.93 +2.37%
Caterpillar Inc. (CAT) $74.23 +2.36%
Travelers Company Inc. (TRV) $116.81 +2.35%
Microsoft Corp. (MSFT) $50.54 +2.22%
Goldman Sachs Group Inc. (GS) $145.50 +2.17%

Dow Jones I.A - Fallers
Home Depot Inc. (HD) $127.37 -0.13%

Nasdaq 100 - Risers
Seagate Technology Plc (STX) $23.95 +6.30%
NetApp Inc. (NTAP) $24.47 +5.57%
Biogen Inc (BIIB) $238.91 +4.55%
TripAdvisor Inc. (TRIP) $63.89 +4.48%
Cerner Corp. (CERN) $57.48 +4.36%
Tesla Motors Inc (TSLA) $210.19 +4.16%
Walgreens Boots Alliance, Inc. (WBA) $83.19 +4.14%
Charter Communications Inc. (CHTR) $227.37 +4.12%
Mattel Inc. (MAT) $31.00 +3.85%
Sba Communications Corp. (SBAC) $107.44 +3.77%

Nasdaq 100 - Fallers
Endo International Plc (ENDP) $15.93 -1.61%
Biomarin Pharmaceutical Inc. (BMRN) $78.37 -1.41%
Alexion Pharmaceuticals Inc. (ALXN) $114.17 -0.67%
Gilead Sciences Inc. (GILD) $82.27 -0.05%