Wall Street gains on bank earnings boost

·3-min read

The three main Wall Street indexes have ended higher for the day and week, with the S&P 500 and the Dow breaking closing records, as investors took strong economic data and bank earnings as signs of momentum in the US pandemic rebound.

Most of the 11 S&P sub-sectors rose on Friday.

The energy index was an exception, weighed by lower oil prices.

The S&P 500 and the blue-chip Dow Jones Industrial Average recorded their fourth straight week of gains while the technology-heavy Nasdaq finished less than one per cent below its own all-time closing high achieved on February 12.

For the S&P 500, it was the benchmark's third record closing high this week and the Dow has surpassed its best finish on two consecutive days.

Investor confidence on the road ahead seems steady, with the volatility index, Wall Street's fear gauge, falling on Friday and on course for its lowest close in 14 months.

"Everyone is looking at just how far we can run before we start raising interest rates," said George Catrambone, head of Americas trading at DWS Group.

"Until we see that significant inflation growth and the Fed starts to talk about raising interest rates, I think it's going to be goldilocks and any disruptions in the market will be opportunities to clean up your risk book."

Further buoyant bank earnings came on Friday from Morgan Stanley, which reported a 150 per cent jump in quarterly profit, joining JPMorgan Chase & Co, Goldman Sachs Group Inc and Bank of America in reinforcing hopes of a swift economic recovery.

Still, the investment bank's shares fell as it also disclosed an almost $US1 billion ($A1.3 billion) loss from the collapse of private fund Archegos.

Shares of JPMorgan, Goldman Sachs, Bank of America and Wells Fargo & Co rose while the S&P financials index was up after hitting a record high in the session.

"When this is all put in context, and compared with other sectors including technology, we're going to see the financials' results look very powerful," said Diane Jaffee, senior portfolio manager at TCW.

"Given what we know about the Fed's loosening on caps for dividend increases and buybacks after the next CCAR results in June, I think we'll have a very strong half-year - at least - for financials."

The Dow Jones Industrial Average rose 159.31 points, or 0.47 per cent, to 34,195.3, the S&P 500 gained 14.39 points, or 0.35 per cent, to 4,184.81 and the Nasdaq Composite added 11.07 points, or 0.08 per cent, to 14,049.84.

The Federal Reserve's pledge to keep interest rates low despite higher inflation has also revived demand for richly valued technology stocks, although bond yields edged higher again on Friday after hitting multi-week lows a day earlier.

Tech behemoth Apple Inc slipped.

It has been among the stocks which led Wall Street's recovery last year from the coronavirus-fuelled crash.

Bitcoin-related stocks including Riot Blockchain and Marathon Digital slumped after Turkey banned the use of cryptocurrencies and crypto assets to purchase goods and services.