US Stock Indexes Rise on Wednesday After Western Alliance Led a Bounce Among Regional Banks
Key Highlights :
US stock indexes rose on Wednesday as Western Alliance Bancorp led a bounce among regional banks amid cautious optimism about a potential breakthrough in the deadlock in Washington over the nation’s debt limit. Shares of US regional banks rose, led by a 12.6% rise in Western Alliance Bancorp as the lender’s deposit growth exceeded $2 billion and brokerage Bank of America Global Research resumed coverage of the bank with a “buy” rating. PacWest Bancorp, Comerica Inc and Zions Bancorporation NA added between 9.2% and 6.5%. The KBW Regional Banking Index rose 3.1% after losing 1.8% in the previous session, while S&P 500 banks added 2.4%.
US President Joe Biden will continue talks with congressional leaders on the debt ceiling later this week, the White House said one day after an hour-long meeting seen as productive. “Cautious optimism expressed from both President Biden and Speaker (Kevin) McCarthy about the progress of the debt talks has made people feel a little bit better,” said Michael James, managing director of equity trading at Wedbush Securities.
Retailers Target Corp and TJX Companies Inc forecast current-quarter profit below expectations despite beating estimates for the first quarter. Shares of Target were up 1.4%, while the T.J. Maxx parent added 2.6% in choppy trading. “Both (results) could be construed as not great, but certainly it could have been worse and not as negative as we saw from Home Depot yesterday,” James added. The S&P 500 retail index rose 1.6%.
Home Depot and a reading on US April retail sales that missed expectations highlighted the impact of higher prices and interest rates on consumers, weighing on Wall Street on Tuesday. Investors will now await retail behemoth Walmart’s earnings on Thursday. Its shares edged 0.2% lower.
At 9:44 a.m. ET, the Dow Jones Industrial Average was up 127.58 points, or 0.39%, at 33,139.72, the S&P 500 was up 16.09 points, or 0.39%, at 4,125.99, and the Nasdaq Composite was up 36.63 points, or 0.30%, at 12,379.69. Shares of Tesla Inc rose 1.9% after its annual shareholder meeting. Top boss Elon Musk played down market rumors that he may step down as CEO of Tesla, touched upon two new mass-market models the company is developing, and reaffirmed that deliveries of its long-delayed Cybertruck pickup would start this year.
Meanwhile, US single-family homebuilding increased in April, but data for the prior month was revised sharply lower, suggesting that the embattled housing market was struggling to find a floor, despite a retreat in mortgage rates. Advancing issues outnumbered decliners by a 2.69-to-1 ratio on the NYSE and by a 1.39-to-1 ratio on the Nasdaq. The S&P index recorded 11 new 52-week highs and eight new lows, while the Nasdaq recorded 25 new highs and 48 new lows.
The stock market rally on Wednesday was primarily driven by the optimism surrounding the potential breakthrough in the debt ceiling talks in Washington. The positive news from the White House and the better-than-expected earnings from the retail sector have also helped to boost investor sentiment.
The regional banks were the biggest gainers on Wednesday, with Western Alliance Bancorp leading the rally. The bank reported a strong deposit growth of more than $2 billion and Bank of America Global Research resumed coverage of the bank with a “buy” rating. Other regional banks such as PacWest Bancorp, Comerica Inc and Zions Bancorporation NA also posted significant gains.
The retail sector was also in focus on Wednesday as Target Corp and TJX Companies Inc reported better-than-expected earnings for the first quarter. Despite the positive results, the companies forecasted lower-than-expected profits for the current quarter. However, the news was not as bad as the Home Depot earnings reported the day before.
Tesla Inc also gained 1.9% after its annual shareholder meeting. CEO Elon Musk played down market rumors that he may step down as CEO of Tesla, touched upon two new mass-market models the company is developing, and reaffirmed that deliveries of its long-delayed Cybertruck pickup would start this year.
Meanwhile, US single-family homebuilding increased in April, but data for the prior month was revised sharply lower, suggesting that the embattled housing market was struggling to find a floor, despite a retreat in mortgage rates.
Overall, the US stock markets posted gains on Wednesday as investors remained cautiously optimistic about the potential breakthrough in the debt ceiling talks in Washington. The positive news from the retail sector and the gains in the regional banks also helped to boost investor sentiment.
