Wall Street hits four-week high on BofA, Goldman boost

(Reuters) – Wall Street’s main indexes hit a one-month high on Wednesday, boosted by upbeat earnings from Bank of America and Goldman Sachs, with a multi-billion dollar deal in the fintech sector also helping a risk-on trade.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid

Goldman Sachs Group Inc (GS.N) surged 8.29 percent and was on pace for its best day in seven years after topping quarterly revenue estimates.

Bank of America Corp (BAC.N) rose 7.63 percent after reporting a better-than-expected quarterly profit on growth in its loan book.

Their results drove a 2.39 percent gain in the financial sector .SPSY, with the S&P banking subsector .SPXBK jumping 3.07 percent.

Adding to the positive mood was a $22 billion buyout offer by financial technology provider Fiserv Inc (FISV.O) for First Data Corp (FDC.N), the largest deal in the financial technology sector.

First Data soared 20.67 percent, while Fiserv’s shares fell 4.21 percent.

A strong start to the U.S. earnings season, trade optimism and hopes of a slower pace in interest rate hikes have helped S&P 500 recoup some of its losses from a recent rout. The index is now about 12 percent away from its Sept. 20 record close.

“There is hope for this earnings season, and Goldman Sachs and Bank of America have got it started off on the right foot,” said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.

“Anything that the market can do to run its normal course of action like mergers and acquisitions, IPO activity will lead to more bullishness.”

The benchmark index is near its 50-day moving average, a key indicator of short-term momentum, for the first time since Dec. 4. This comes after the Nasdaq crossed that milestone in the prior session.

At 12:27 a.m. EDT the Dow Jones Industrial Average .DJI was up 134.13 points, or 0.56 percent, at 24,199.72, the S&P 500 .SPX was up 7.50 points, or 0.29 percent, at 2,617.80 and the Nasdaq Composite .IXIC was up 13.14 points, or 0.19 percent, at 7,036.98.

The energy sector .SPNY fell 2.39 percent, the most among the four S&P sectors in the red. [O/R]

Among other company earnings, Nordstrom Inc (JWN.N) forecast full-year profit at the lower end of its prior estimates, sending its shares down 6.75 percent. United Airlines (UAL.O) rose 5.60 percent after posting a quarterly profit beat.

S&P 500 companies are expected to report a 14.3 percent rise in fourth-quarter earnings, lower than the 20.1 percent growth forecast in October, according to IBES data from Refinitiv.

Also on tap is a no confidence vote for British Prime Minister Theresa May’s government at 2:00 p.m. ET, which May is expected to survive.

The Federal Reserve’s Beige Book, a summary of the state of U.S. business across the central bank’s 12 regional districts, is also expected at the same time.

Advancing issues outnumbered decliners by a 1.79-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and one new low, while the Nasdaq recorded 27 new highs and 14 new lows.

Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva

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