NEW YORK (AP) — Financial stocks surged on Thursday, helping push the market to its biggest gain in almost two weeks.
Citigroup jumped after reporting that its earnings rose sharply in the third quarter as the bank continued to cut expenses and clean up its books in the wake of the financial crisis. KeyCorp also climbed after posting solid earnings.
The reports cheered investors, who have been looking for good news to boost stocks since a summer sell-off roiled the markets. However, the optimism may be short-lived. Third-quarter earnings are forecast to contract overall as falling energy prices and weak global demand start to eat into profits.
“Financials could be the bright spot of the whole earnings season, so let the market have its fun,” said Karyn Cavanaugh, senior market strategist at Voya Investment Financial. “We’ll take any bright spot we can get in this earnings season, because things really don’t look good.”
The Standard & Poor’s 500 index rose 29.62 points, or 1.5 percent, to 2,023.86. That was the biggest one-day gain for the index since Oct. 5.
The Dow Jones industrial average climbed 217 points, or 1.3 percent, to 17,141.75. The Nasdaq composite rose 87.25 points, or 1.8 percent, to 4,870.10.
Earnings for companies in the S&P 500 are forecast to drop 5 percent in the third quarter, according to S&P Capital IQ. If earnings do end up lower, it would be the first time in six years they have contracted.
On Thursday, financial stocks climbed 2.3 percent, the most among the 10 sectors that make up the S&P 500. Citigroup climbed $2.25, or 4.4 percent, to $52.97, and KeyCorp rose 60 cents, or 4.7 percent, to $13.31.
Stocks have started October with a strong rally after closing out September with their worst quarterly performance in four years. Worries about the Chinese economy and the possibility of a Federal Reserve rate increase shook the market in August and September.
After a run of weak economic reports in the last month, many investors now think the Fed will keep interest rates unchanged for the rest of the year. Fed policymakers have kept the bank’s benchmark lending rate close to zero for almost seven years, supporting a bull market in stocks.
The outlook for interest rates will likely hold the key for how stocks perform for the rest of the year, said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute.
“Last year, we had a pretty good rally into year end,” Lynch said. “I wouldn’t be surprised, should people get a clear indication of what’s going to happen with the Fed, if we see that happen again.”
Netflix was among the day’s biggest losers.
The stock slumped $9.14, or 8.3 percent, to $101.09 after the company reported late Wednesday that it is hooking fewer U.S. viewers than it hoped.
First Data, an electronic payment company based in Atlanta, raised $2.6 billion in an initial public offering, making it the biggest listed IPO of the year so far, according to data provider Dealogic. The stock priced at $16, but closed down 25 cents, or 1.6 percent.
In metals trading, gold rose $7.70 to $1,187.50 an ounce. Gold has climbed 6 percent this month as doubts about the health of the global economy have resurfaced. Silver rose 4.7 cents to $16.16 an ounce. Copper rose 0.8 cents to $2.42 per pound.
In European stock trading, Germany’s DAX rose 1.5 percent. Britain’s FTSE 100 advanced 1.1 percent and the French CAC-40 was 1.4 percent higher.
Bonds edged lower, pushing the yield on the 10-year note up to 2.02 percent from 1.98 percent on Wednesday. The euro fell to $1.1382 while the dollar edged down to 118.89 yen.
The price of oil fell on Thursday. Benchmark U.S. crude lost 26 cents to close at $46.38 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 44 cents to $48.71 a barrel in London.
In other futures trading on the NYMEX:
— Wholesale gasoline fell 0.1 cents to close at $1.307 a gallon.
— Heating oil rose 0.3 cents to close at $1.486 a gallon.
— Natural gas fell 6.5 cents to close at $2.453 per 1,000 cubic feet.
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