Stocks Gain Before Key Reports
Stocks rallied Monday as investors welcomed a retreat in energy prices and snapped up bank stocks ahead of a wave of earnings reports from Wall Street bellwethers.
The Dow Jones Industrial Average was up 116 points, or 1.4%, at 8262.90. All three of its banking components, which report earnings later in the week, posted solid gains Monday. Bank of America was up 7.2%, Citigroup rose 3.9%, and J.P. Morgan Chase rose 3.3%.
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The Nasdaq Composite Index rose 1.2%. The S&P 500 was up 1.6%. All its sectors posted gains, led by a 4.4% gain in the financial category.
The financial sector was helped by a 4.8% gain in Goldman Sachs, which kicks off the wave of bank reports on Tuesday. The bank's shares were upgraded by Meredith Whitney Advisory Group to "buy" from "neutral."
"It's a major positive event" for Ms. Whitney to put a buy rating on any bank, said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va., noting that she has a reputation as a bear after being one of the earliest analysts analysts to predict major pain for Wall Street from soured credit bets.
Mr. Engelke, a long-time bull on bank stocks, has been trimming his holdings in the sector lately, mostly to take some profits and guard against possible dilution. But he said he's still bullish for the long term on the sector, along with energy, which he believes has fallen too sharply lately due to concerns about possible curbs on oil speculation.
"I still think we're going to get faster growth [in the U.S. economy] than expected through the end of the year, which will be good for demand," said Mr. Engelke, who recently has been buying shares in an exchange-traded vehicle that tracks oil futures.
In recent action, crude futures were down $1.25 to $58.64 a barrel in New York. Other raw materials also traded lower, with the broad Dow Jones-UBS Commodity Index off 0.5%.
Blue chips Intel and Johnson & Johnson will also report Tuesday. They were up 2% and 1%, respectively.
Anticipation of the bank's earnings announcements overshadowed the woes of lender CIT Group, which plunged 17%. The struggling company said it's in talks to join the FDIC's temporary liquidity guarantee program as the lender to small and midsize businesses scrambles to survive.
Among the bellwethers due to report after Monday's close are CSX and Novellus Systems. CSX was little changed and Novellus climbed 3.6%.
Stocks have been in a rut in recent weeks due to worries about the economy, chart-based selling, and weak volumes. The Dow is on a four-week losing streak.
There were no major economic releases scheduled Monday.
Among stocks to watch, OSI Pharmaceuticals rose 8.4% after a Phase III study of Tarceva showed improvement in survival when used after initial chemotherapy in patients with advanced nonsmall cell lung cancer.
Bond prices were mixed. The two-year note rose 1/32 to yield 0.892%. The 10-year note was down 3/32 to yield 3.308%.
The dollar was mixed. One euro cost $1.3968, up from $1.3949 late Friday. One dollar fetched 92.68 Japanese yen, up from 92.42 yen.
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