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Wall Street stocks were boosted on Tuesday by gains in the shares of big banks, after Morgan Stanley and Bank of America added to the roster of companies reporting second-quarter earnings.
The S&P 500 closed 0.7 per cent higher, while the KBW index of bank stocks added 3 per cent.
Morgan Stanley climbed more than 6 per cent, making it the one of the best performers in the S&P 500, after chief executive James Gorman predicted the bank would eventually triple its assets under management even as quarterly profits dropped on the back of lower fixed-income trading revenues.
Bank of America’s shares advanced more than 4 per cent following better than expected second-quarter profits. Charles Schwab was the benchmark index’s best performer, jumping almost 13 per cent as the broker and bank reported that deposit outflows had slowed.
The rally in banks shares came despite lingering investor concerns over lenders’ balance sheets, with the KBW Bank index down about 15 per cent since the start of the year following the collapse of several regional banks in the spring.
Separately on Tuesday, data from the US Census Bureau showed that retail sales rose 0.2 per cent in June. That was softer than economists’ expectations of a 0.5 per cent rise, but added to evidence that domestic consumption remains strong despite pressure from high interest rates and inflation.
“The broader picture, however, is that growth in consumers’ spending has weakened significantly since the Fed started hiking rates aggressively; a further downshift lies ahead,” said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
America’s technology-focused Nasdaq Composite gauge rose 0.8 per cent on Tuesday.
The yield on the two-year Treasury note, which is sensitive to changes in interest rate expectations, rose 0.03 percentage points to 4.76 per cent, while the benchmark 10-year yield was flat at 3.80 per cent. Bond yields fall as prices rise.
European equities ticked higher on Tuesday after European Central Bank governing council member Klaas Knot signalled that policymakers could soon halt their aggressive monetary tightening campaign: he said that further rate rises beyond next week’s meeting were not a guarantee.
The pan-European Stoxx 600 gained 0.6 per cent, recouping losses from the previous session, while France’s Cac 40 and Germany’s Dax both advanced 0.4 per cent.
The shares of London-listed online retailer Ocado jumped 19 per cent, leading the Stoxx 600 index, after the company said its retail division was “making good progress, with a return to profitability” in the second quarter.
Asian equities continued to slip on Tuesday, with the Hang Seng index declining 2.1 per cent after Hong Kong markets resumed trading following a day-long halt triggered by a storm.
China’s CSI 300 index of mainland-listed equities fell 0.3 per cent and South Korea’s Kospi slid 0.4 per cent. Japan’s Topix index was the region’s outlier, climbing 0.6 per cent.
