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Wall Street’s benchmark S&P index rose on Wednesday as results from big US banks boosted investor sentiment, while retail sales data signalled resilience among the country’s consumers.
The S&P 500 index of blue-chip US stocks added 0.2 per cent, a day after hitting a 15-month high, with Charles Schwab gaining 11.9 per cent after the Texas-based broker and bank reported that its profits beat analysts’ forecasts in the second quarter of 2023.
Bank of America, the second-largest bank in the US, gained 3.7 per cent, having also reported a better than expected profit for the same period, while the shares of Morgan Stanley added 5.2 per cent.
The big banks’ earnings came as concerns over lenders’ balance sheets lingered, following the collapse of several regional banks in the spring. JPMorgan and Wells Fargo last week reported forecast-beating profits for the second quarter.
Meanwhile, data from the US Commerce Department showed that the retail sales “control group”, which strips out volatile automotive, building materials, petrol and food service components, rose 0.6 per cent month on month in June, well above the 0.3 per cent forecast.
“This is important as this stripped-down version of retail sales tends to have a better correlation with broader consumer spending trends over time”, said James Knightley, chief international economist at ING.
The yield on the two-year Treasury note, which is sensitive to interest rate expectations, fell 0.03 percentage points to 4.7 per cent. The benchmark 10-year yield fell 0.04 percentage points to 3.76 per cent. Bond yields fall as prices rise.
In Europe, the region-wide Stoxx 600 gained 0.5 per cent, recouping losses from the previous session, while France’s Cac 40 and Germany’s Dax both advanced 0.2 per cent.
The shares of London-listed online retailer Ocado jumped 20 per cent, leading the Stoxx 600 index, after the company said its retail division was “making good progress, with a return to profitability” in the second quarter.
Asian equities continued to slip on Tuesday, with the Hang Seng index declining 2.1 per cent after Hong Kong markets resumed trading following a day-long halt triggered by a storm.
China’s CSI 300 index of mainland-listed equities fell 0.3 per cent and South Korea’s Kospi slid 0.4 per cent. Japan’s Topix index was the region’s outlier, climbing 0.6 per cent.
