Stocks rise ahead of busy earnings week
The major stock indexes surged more than 2% on Monday, recording their biggest percentage gains in six weeks, after an influential and usually downbeat analyst said some positive things about two big financial institutions.
Banking analyst Meredith Whitney triggered the rally by raising her rating on Goldman Sachs Group, which reports earnings today. She also said on CNBC that hard-hit Bank of America looked inexpensive given the assets on its books.
The Dow Jones industrial average jumped 185 points.
Investors latched on to Whitney’s comments because she has for years offered one of the more pessimistic -- and accurate -- assessments of the banking business. Although she remains cautious on banks overall, her newfound optimism for some players was enough to send financial stocks sharply higher. Shares of Bank of America, which also is set to release its financial results this week, shot up 9.3%.
Traders saw the hopeful outlook on banks as a sign that other industries could be in better shape than analysts had indicated.
The Dow rose 185.16 points, or 2.3%, to 8,331.68. All 30 stocks in the average rose -- the first time that has happened since March.
The Standard & Poor’s 500 index jumped 21.92 points, or 2.5%, to 901.05. The Nasdaq composite index rose 37.18, or 2.1%, to 1,793.21.
The three indexes had their biggest gain since June 1.
Five stocks rose for every one that fell on the New York Stock Exchange.
Shares of Goldman Sachs rose 5.3%. An index of 24 large banks surged 6.5%.
The upswing in financial stocks did little, however, to help CIT Group, whose shares tumbled 12% on reports that the commercial lender had been seeking more help from the federal government. After the stock market closed, the Wall Street Journal reported the government was in advanced talks to give aid to the company, perhaps by backing its debt.
The gains in stocks cooled demand for government debt, pushing up yields on Treasury securities. The yield on the benchmark 10-year T-note jumped to 3.33% from 3.29% late Friday.
Oil futures fell 20 cents to settle at $59.69 a barrel on the New York Mercantile Exchange.
Overseas, key stock indexes climbed 1.8% in Britain, 3.2% in Germany and 2.3% in France. Japan’s Nikkei stock average fell 2.6%.
