US stocks rallied broadly on Wednesday in the third-biggest one-day gain of the year, pushing the Dow Jones Industrial Average back above the key 10,000 level. Financial stocks, including JP Morgan Chase and Bank of America, led the climb, boosted by a rosy earnings forecast from State Street and as details on euro-zone bank stress tests removed some uncertainty.
The Dow climbed 274.66 points (2.82%) to 10,018.28, its biggest one-day gain since May 27 and highest close since June 28. The measure is now up 2.5% for the month but still down 3.93% for the year.
All 30 of the measure's components rose. Cisco Systems was the measure's top performer with a jump of $1.14 (5.3%) to $22.48.
The Dow's financial components were also strong, with JP Morgan up $1.82 (5%) to $38.15, and Bank of America up 65 cents (4.6%) to $14.71.
The sector was boosted by a projection from money-manager State Street for second-quarter profit well above analysts' forecasts. State Street, which isn't a Dow component, leapt $3.29 (9.9%) to $36.63.
Also lifting financials, Europe's banking supervisor named the 91 banks that it will test for resilience to further market and credit risks and laid out the key features included in the tests. The banks are being tested individually but following a common set of criteria. The results will be made public July 23. Investors found it encouraging to learn more of the details about the test, as uncertainty about it had been weighing on financial stocks in Europe as well as in the US.
The Nasdaq Composite rose 65.59 (3.13%) to 2,159.47. The Standard & Poor's 500 index climbed 32.21 (3.13%) to 1,060.27. All of the measure's categories rose, led by the financial sector, which leapt more than 4%.
Family Dollar Stores tumbled $3.18 (8.1%) to $36.26. The discount retailer's fiscal third-quarter earnings increased 19% on higher sales and margins, but it gave sombre indications that its customers are being overwhelmed by the country's lingering economic weakness and forecast fiscal fourth-quarter earnings below analysts' estimates. The results weighed on other discounters, including Dollar Tree, which slid $1.32 (3.1%) to $41.61.
American depositary shares of BP rose $1.28 (4%) to $33.19. Chief Executive Tony Hayward met with Abu Dhabi's powerful Crown Prince Mohammed bin Zayed Al Nahyan during a visit to the oil-rich sheikdom, and said that he would be happy to see the city-state's sovereign wealth fund buy a stake of up to 10% in BP, a person with knowledge of the meeting said.
Cree rose $5.11 (8.4%) to $66.07, and American depositary shares of Philips Electronics NV edged up 90 cents (2.9%) to $31.55, after the companies said they have signed a patent cross-license agreement as part of a joint effort to accelerate the growth of light-emitting diodes.
EMC Corp. rose 95 cents (5.2%) to $19.11, after the global storage leader said it agreed to acquire Greenplum Inc., a privately held data-warehousing company that specialises in analysing large amounts of information. The acquisition will give EMC, which also has majority ownership in virtualisation-leader VMware, a foothold in a fast-growing market for large data warehouses. VMware added $4.88 (7.5%) to $69.69.
New Gold shed 67 cents (12%) to $5.13, after the Canada-based miner said a district court in Mexico denied the company's appeal over the cancelled environmental impact statement at its Cerro San Pedro Mine. New Gold said it hasn't received the full court decision, but plans to appeal following a full review of the documents.
For Australian ADRs listed on the NYSE, BHP Billiton firmed $2.16 (3.38%) to US$66.00, Rio Tinto Plc added $1.40 (3.08%) to US$46.88, ResMed advanced $2.07 (3.34%) to US$64.02, Telstra Corporation improved 37 cents (2.75%) to US$13.83, Telecom Corporation of NZ climbed 19 cents (2.97%) to US$6.58 and Westpac increased $2.85 (3.14%) to US$93.70.
At 7:45 AM (AEST), the 10-year Treasury note yield was 2.98% and the five year yield was 1.78%.
A rally in banking shares, powered by the hope that impending bank stress test results may not be as bad as feared, helped European stocks turn higher on Wednesday.
The Stoxx Europe 600 index rose 1.4% to 246.06.
Reports on Wednesday suggested the criteria used to measure European banks' health might be more generous than originally feared. Stress tests assume a 17% hit on the value of Greek government bonds they hold, according to two reports.
Notable financial-sector gainers included lenders with significant exposure to so-called peripheral European countries. Societe Generale shares rose 7% and Spain's Santander gained 6.5%.
As for the major regional benchmarks, the French CAC-40 index added 1.8% to 3,483.44, the German DAX index gained 0.9% to 5,992.86 and the UK's FTSE 100 index closed up 1% at 5,014.82.
Shares of Marks & Spencer lost 2.6%, as the UK department-store operator said it remains cautious over the outlook for consumer spending. It reported a 3.6% rise in first-quarter UK comparable sales.
Losses were steeper for CRH. The Irish building materials group lost 5.8% after it pegged first-half pretax profit at close to break-even, compared with a profit of EUR100m in the year-ago period. CRH also said business conditions are getting more difficult, with concerns over deficits clouding the euro-zone outlook and recent US economic data pointing to a "softening" of the recovery.
Speculation of interest from the Middle East also helped supermarket group J. Sainsbury gain on Wednesday. The firm's shares rallied 4.9% to 344 pence as talk resurfaced that it could get a bid from minority shareholder Qatar Investment Authority. Sainsbury said it doesn't comment on rumour and speculation.
On the FTSE 100, Rio Tinto weakened 13.50 pence (0.44%) to 2,981.39 pence and BHP Billiton rose 12.00 pence (0.68%) to 1,755.55 pence.
Asian stocks largely declined after weak US data refuelled worries about the strength of the global economic recovery while technology shares across the region fell, unimpressed by Samsung Electronics' forecast of a record operating profit.
Japan's Nikkei Stock Average fell 0.6%. China's Shanghai Composite Index ended 0.5% higher after enduring a choppy trading session, as gains in consumer and cement stocks offset broad declines in banks. Hong Kong's Hang Seng Index dropped 1.1%.
New Zealand shares ended higher after Wall Street closed in positive territory although they pared earlier gains as US futures eased and many Asian markets moved into the red. The NZX-50 ended up 0.3%, or nine points, to 2,961.74. Trading, however, remained fairly tepid.
Base metals on the London Metal Exchange bounced back from early losses to end higher, tracking a recovery in the euro and gains in US equity markets. Aluminium rose $15 (0.76%) to $2,000 while copper firmed $130 (1.98%) to $6,700 and nickel added $245 (1.29%) to $19,170. Zinc strengthened $20 (1.09%) to $1,860 and lead gained $25 (1.41%) to $1,800. Comex copper was last quoted at 304.55 US cents per pound.
Gold futures rose as the optimistic economic sentiment that boosted commodities and equities spread to precious metals. Spot gold was last quoted at $1,202.20. Comex gold futures climbed $3.80 (0.32%) to $1,198.90. Spot silver was last quoted at $18.01.
Crude oil followed US equities higher, snapping a six-session streak of losses. West Texas Intermediate was last quoted at US$74.07 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.7919 euros, 87.66 yen, 1.159 AUD and 65.91 pence.