Stocks

S&P 500 ascends 2% in two days

Reuters | Updated on January 20, 2018 Published on May 26, 2016

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Wall Street rose robustly for a second straight session on Wednesday, helped by higher oil prices and investors becoming more comfortable with the prospect of an interest rate hike as early as next month.

Combining Tuesday and Wednesday's performances, the S&P 500 gained 2 per cent, its strongest two-day run since early March.

US crude inventories

The energy sector led the way in the latest session, up 1.51 per cent as oil prices rose towards $50 a barrel. That followed a report of a larger-than-expected drop in US crude inventories, adding to expectations that a steep selloff in the commodity may be over.

Comments from policymakers in recent days and upbeat US economic data have raised expectations that the Federal Reserve could pull the trigger on a rate increase much sooner than previously thought.

Fed rate hike

Traders are now pricing in a 38-per cent chance for a rate hike in June and 45 per cent in July, according to CME Group's FedWatch tool.

The S&P financial index rose 1.03 percent and ended the session at its highest point this year. Standing to benefit from higher interest rates that they can pass on to borrowers, Bank of America, JPMorgan and Citigroup rose over 1.5 per cent.

“What you're seeing is a recognition that this is going to happen and investors are getting more comfortable with it,” said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia. “There's a recognition that economic growth is okay.”

UK's June referendum, US elections

Uncertainty around the United Kingdom's June referendum on whether to leave the European Union, as well as November's US presidential election, could limit stock gains in the next few months, Brunner said.

The Dow Jones industrial average added 0.82 per cent to end at 17,851.51 points and the S&P 500 gained 0.7 per cent to 2,090.54. The Nasdaq Composite climbed 0.7 per cent to 4,894.89.

Gains were broad-based, with nine of the 10 major S&P sectors trading higher.

The S&P 500 has risen about 15 per cent from its February lows and is up about 2 per cent for the year.

Shares of Computer Sciences soared 42 per cent after Hewlett Packard Enterprise said it would spin off and merge its struggling IT services business with the company. Hewlett Packard Enterprise jumped 6.77 per cent.

Alibaba Group tumbled 6.82 per cent after saying it was being investigated by the US Securities and Exchange Commission over whether its accounting practices violated any federal laws.

About 6.9 billion shares changed hands on US exchanges, below the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered decliners on the NYSE by 2,048 to 944. On the Nasdaq, 1,812 issues rose and 996 fell.

The S&P 500 index showed 34 new 52-week highs and no new lows, while the Nasdaq recorded 96 new highs and 22 new lows.

Published on May 26, 2016

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