Tech, banking shares lead US stocks higher

NEW YORK (AFP) – Technology and banking shares led a rally in US stocks on Wednesday (June 28) ahead of the final results of the Federal Reserve’s bank stress tests that were expected to lead to large shareholder payouts.

Bank of American and JPMorgan Chase each bounced more than 2 per cent ahead of the Fed’s announcement that will approve dividends and share buyback plans. In the first part of the results, the Fed last week said all 34 banks it examined could withstand a severe recession.

Analysts also pointed to comments from European officials suggesting investors had overreacted on Tuesday to upbeat remarks from European Central Bank chief Mario Draghi that were seen as more hawkish on monetary policy.

“As long as there is stimulus somewhere, it is supportive of equities,” said Chris Low, chief economist of FTN Financial.

The Dow Jones Industrial Average gained 0.7 per cent to close the session at 21,453.72.

The broad-based S&P 500 gained 0.9 per cent to end at 2,440.68, while the tech-rich Nasdaq Composite Index jumped 1.4 per cent to 6,234.41.

Technology shares, which fell hard on Tuesday, finished firmly higher. Apple rose 1.5 per cent, Facebook 1.8 per cent and Google-parent Alphabet 1.4 per cent.

Cheerios maker General Mills gained 1.6 per cent after it reported an 11 percent increase in fourth-quarter net profit to US$409 million (S$566 million), but projected organic net sales would fall 1 to 2 per cent in 2018.

KB Home advanced 5.4 per cent after reporting second-quarter net income almost doubled to US$31.8 million, and offering a positive outlook on the prospect for homebuilding due to tight housing supply in key markets.