Wednesday, 29 June 2016

Wall Street opens higher as Brexit grip loosens

Wall Street opened sharply higher for the second day on Wednesday as the initial panic surrounding Britain's vote to leave the European Union settled and investors looked for bargains among beaten-down stocks.

The "Brexit" verdict on Friday sent shockwaves through global markets, wiping out about $3 trillion in a two-day selloff.

The S&P financial stocks index .SPSY, which was hit the most since the referendum - was up 1.27 percent, making it the biggest percentage gainer among the 10 major sectors.

Bank of America (BAC.N) and JPMorgan (JPM.N) were among the top influences on the S&P, while Goldman Sachs' (GS.N) provided the biggest boost to the Dow.

Adding to the upbeat sentiment, data showed U.S. consumer spending, which accounts for more than two-thirds of economic activity, increased 0.4 percent in May.

Investors are now hoping that central banks around the world will ease monetary policy to weather the storm as Britain and the EU chalk out the next steps for the country's exit from the trading bloc.

"The central banks will stay ready and you'll probably see a couple of policy easings from the Bank of England and I think the likelihood of Fed increases are probably low," said Ernie Cecilia, chief investment officer of Bryn Mawr Trust in Pennsylvania.

Britain's vote could pose a new drag on the U.S. economy at a time when momentum in the job market may already by slowing, Federal Reserve governor Jerome Powell said on Tuesday.

Traders have priced in a mere 17 percent chance of a hike as late as December, according to CME Group's FedWatch tool.

At 9:35 a.m. ET (1335 GMT), the Dow Jones Industrial Average .DJI was up 142.14 points, or 0.82 percent, at 17,551.86. The S&P 500 .SPX was up 18.65 points, or 0.92 percent, at 2,054.74. All the 10 major S&P indexes were higher.

The Nasdaq Composite .IXIC was up 48.84 points, or 1.04 percent, at 4,740.71.

Mallinckrodt (MNK.N) rose 4 percent to $58.50 after BMO started coverage with an "outperform" rating. The stock was the biggest percentage gainer among S&P components.

General Electric (GE.N) rose 1.7 percent to $30.47 after the Financial Stability Oversight Council removed a "systemically important" label from its lending unit.

Advancing issues outnumbered decliners on the NYSE by 2,527 to 235. On the Nasdaq, 1,966 issues rose and 307 fell.

The S&P 500 index showed 33 new 52-week highs and no new lows, while the Nasdaq recorded 14 new highs and 11 new lows.

Reference: Yashaswini Swamynathan

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