US close: Wall St lifted for second day by oil and banks
Wall Street drove higher for a second day as big bank stocks and rising oil and house prices overrode a slowdown in the service sector.
The Dow Jones Industrial Average closed up 0.82% at 17,851.51, the S&P 500 and the Nasdaq Composite both added 0.70% to finish at 2,090.54 and 4,894.89, their highest closes in around a fortnight and not too far from their three-month peaks.
The dollar was down against the euro and sterling, but up on the yen, with analysts saying the greenback appeared to be "taking a bit of a breather" after its recent gains, as traders readjust their expectations on the timing of a possible rate rise in June.
Aside from this day's rest, IG's Chris Beauchamp said there was little sign of the underlying dollar rally abating. "The focus on US data and Fed speeches picks up speed again tomorrow, although it is still more than two days until Janet Yellen provides her contribution. A resurgent dollar is still the biggest threat to the equity rally, so equity investors will be hoping for a dovish Janet Yellen on Friday, which will in its turn put a spring into US stocks when they return from their long weekend," he said.
Crude prices were driven close to the $50 mark by data on Wednesday that showed weekly crude inventories had shrunk more than expected. The Energy Information Administration said inventories fell 4.2m barrels per day to 537.1m barrels in the week to 20 May, the sixth weekly fall in a row and bigger than analysts’ forecasts for a decline of 2m barrels.
The report followed data from the American Petroleum Institute showing US crude stocks dropped by 5.1m barrels last week.
Front-month prices for West Texas Intermediate rose 2.2% to $49.69 per barrel and Brent edged up 2.59% to $49.87 at 2125 BST.
Meanwhile, following the encouraging report on US new home sales the prior day, the Federal Housing Finance Agency revealed US house prices rose more than expected in March. The home price index was 0.7%, compared to forecasts of 0.4% and the previous month’s 0.5%.
US mortgage applications rose 2.3% in the week to 20 May, compared to a 1% drop the previous week, according to the Mortgage Bankers’ Association.
A mixed note was struck by the reading for US trade deficit on goods as it increased from $57.1bn in March to $57.5bn in April, according to the Department of Commerce but was less than the $60bn shortfall which markets had been expecting.
More negative was news that activity in the US services sector unexpectedly deteriorated in May, according to Markit’s flash US services purchasing managers’ index. The PMI reading fell to 51.2 from 52.8 in April, missing expectations for a reading of 53.1, though it remained above the 50.0 mark that separates contraction from expansion, it was well below the long-run survey average of 55.6.
In company news, energy companies led the S&P risers, while Goldman Sachs topped the Dow and JP Morgan made a solid advance as the banking sector was further buoyed by the increased US rate-hike chatter.
Hewlett Packard rose sharply after saying late on Tuesday that it will spin off its enterprise services business and merge it with Computer Sciences Corp.
Technology giant Microsoft was also in the black after announcing that it will axe 1,850 workers from its smartphone business.
Cruise operator Royal Caribbean was hit by earnings downgrades from Morgan Stanley after its China channel checks revealed "sharp cruise price drops, a distribution system under pressure, and risk from 2017 new entrants".
S&P 500 - Risers
Transocean Ltd. (RIG) $10.11 +9.65%
Chesapeake Energy Corp. (CHK) $4.35 +7.41%
CF Industries Holdings Inc. (CF) $29.52 +6.92%
Southwestern Energy Co. (SWN) $13.13 +6.83%
Hewlett Packard Enterprise (HPE) $17.35 +6.77%
Devon Energy Corp. (DVN) $36.44 +5.65%
United States Steel Corp. (X) $14.28 +5.39%
Diamond Offshore Drilling Inc. (DO) $25.45 +5.21%
Best Buy Co. Inc. (BBY) $32.07 +4.98%
Freeport-McMoRan Inc (FCX) $11.65 +4.86%
S&P 500 - Fallers
Yahoo! Inc. (YHOO) $35.59 -5.17%
Williams Companies Inc. (WMB) $21.25 -3.98%
Citrix Systems Inc. (CTXS) $83.14 -3.20%
Royal Caribbean Cr (RCL) $77.50 -2.89%
Public Service Enterprise Group Inc. (PEG) $43.79 -2.69%
Carnival Corp. (CCL) $49.63 -2.36%
Total System Services Inc. (TSS) $53.55 -2.30%
Intuit Inc. (INTU) $105.02 -2.13%
Kroger Co. (KR) $34.94 -1.63%
Edwards Lifesciences Corp. (EW) $99.91 -1.56%
Dow Jones I.A - Risers
Goldman Sachs Group Inc. (GS) $161.25 +2.32%
International Business Machines Corp. (IBM) $151.69 +2.28%
Caterpillar Inc. (CAT) $72.57 +2.08%
Apple Inc. (AAPL) $99.62 +1.76%
Merck & Co. Inc. (MRK) $56.57 +1.74%
Cisco Systems Inc. (CSCO) $28.93 +1.62%
Chevron Corp. (CVX) $101.77 +1.58%
JP Morgan Chase & Co. (JPM) $65.52 +1.52%
Boeing Co. (BA) $128.86 +1.07%
Intel Corp. (INTC) $31.39 +1.06%
Dow Jones I.A - Fallers
Nike Inc. (NKE) $55.99 -1.06%
McDonald's Corp. (MCD) $123.26 -0.56%
Visa Inc. (V) $79.06 -0.40%
Home Depot Inc. (HD) $133.20 -0.12%
Nasdaq 100 - Risers
Western Digital Corp. (WDC) $44.15 +4.42%
Bed Bath & Beyond Inc. (BBBY) $44.55 +3.44%
Seagate Technology Plc (STX) $21.48 +2.87%
Biogen Inc (BIIB) $279.70 +2.48%
PACCAR Inc. (PCAR) $55.47 +2.40%
O'Reilly Automotive Inc. (ORLY) $263.63 +2.38%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $211.48 +2.37%
Netflix Inc. (NFLX) $100.20 +2.36%
Dish Network Corp. (DISH) $47.81 +2.35%
Incyte Corp. (INCY) $83.16 +2.33%
Nasdaq 100 - Fallers
Yahoo! Inc. (YHOO) $35.59 -5.17%
JD.com, Inc. (JD) $22.98 -3.40%
Citrix Systems Inc. (CTXS) $83.14 -3.20%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $46.57 -2.59%
Intuit Inc. (INTU) $105.02 -2.13%
Charter Communications Inc. (CHTR) $225.60 -1.22%
Ctrip.Com International Ltd. Ads (CTRP) $44.89 -1.17%
Endo International Plc (ENDP) $15.31 -0.84%
Regeneron Pharmaceuticals Inc. (REGN) $394.49 -0.81%
Henry Schein Inc. (HSIC) $171.53 -0.70%