US stocks rose for the third straight day yesterday, sparked by results from Bank of America and Morgan Stanley and as the latest jobless claims dropped to a near four-year low.
The S&P 500 hit a fresh five-month high, with the industrials, consumer discretionary stocks and financials leading gains.
Tech shares advanced ahead of earnings from a number of bellwethers. But after the bell, shares of Google fell 10 per cent to $575.50 following its results.
In the regular session, Bank of America climbed 2.4 per cent to $6.96 after it reported it swung to a fourth-quarter profit from a year-ago loss. Morgan Stanley reported a loss that was narrower than expected, sparking a 5.4 per cent jump in its stock to $18.28.
“We think [financials] have pretty much bottomed here in the US,” said Paul Simon, chief investment officer at Tactical Allocation Group in Birmingham, Michigan.
“They represent some compelling value. We think a lot of the bad news has been discounted, and you’ve seen stock prices rallying in the beginning of the year,” said Simon, whose firm has been buying financials.
Financial shares have rallied since the start of the year. The S&P financial index is up 8.1 per cent so far for 2012, helping to push the S&P 500 up 4.5 per cent for the year.
In US economic data, data showed the number of Americans filing for new jobless benefits dropped to a near four-year low last week. It added to views that the economy is slowly moving forward.
Semiconductor stocks also advanced, with the PHLX Sox Index rising 1.9 per cent. Xilinx shot up one per cent to $35.64 a day after issuing an upbeat forecast.
The Dow Jones industrial average rose 45.03 points, or 0.36 per cent, to 12,623.98 at the close. The Standard & Poor’s 500 Index gained 6.46 points, or 0.49 per cent, to 1,314.50. The Nasdaq Composite Index climbed 18.62 points, or 0.67 per cent, to close at 2,788.33.
In a sign of optimism about Europe, both Spain and France drew strong demand at government debt auctions.
With the S&P 500 having broken above the 1,300 level, it looks set to hit the 1,360-1,370 area, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
“That [area] represents the May 2011 high ... and I believe we will see that during this earnings season,” Zaro said.