Street rallied for a second day yesterday as concerns about Europe’s sovereign debt crisis waned, giving investors the chance to add to positions in winners among banks and retailers.
More than two stocks rose for every decliner on the New York Stock Exchange, with bank stocks leading the way after Goldman Sachs said improving economic conditions will favour that sector.
The European Central Bank allayed some concerns of a growing Eurozone crisis with hefty purchases of Portuguese and Irish debt. The European Central Bank, however, said it did not plan to increase the size of its liquidity programme at this time.
The KBW bank index shot up 3.9 per cent. The S&P 500 financial index rose 2.6 per cent, making it the largest gainer among S&P sectors.
“The fears had been centered on Europe. That seems to have stabilised, and now the focus is on what domestic and international growth will look like. People are betting that growth will be better than people had feared,” said Mark Bronzo, portfolio manager at Rydex-SGI in Irvington, New York.
Retailers’ shares rose on stronger-than-expected November sales data, which reflects a healthy start to the holiday shopping season. The S&P 500 retail index rose 1.8 per cent.
The data follows a recent flurry of reports suggesting a pick-up in US economic activity that has let investors worry less about troubles overseas.
The Dow Jones industrial average gained 106.63 points, or 0.95 per cent, to 11,362.41.
The Standard & Poor’s 500 Index rose 15.46 points, or 1.28 per cent, to 1,221.53.
The Nasdaq Composite Index added 29.92 points, or 1.17 per cent, to 2,579.35.
Further supporting financial shares, Goldman Sachs said US banks are on stronger footing because of an improving economy, higher equity prices and a favourable interest-rate environment.
Shares of regional lender Marshall & Ilsley jumped 12.3 per cent to $5.48 and Bank of America gained 3.5 percent to $11.68.