Earlier this week, other banks reported mixed results that weighed on the sector, along with concerns about US President Donald Trump’s proposed one-year limit, which would cap credit card interest rates at 10%.Investors are still buying stocks that are undervalued compared to technology, says Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.
“It was growth, technology or crisis in this market,” he said in recent years. Nowadays it is “the banks and the old-fashioned industrial companies” that stand out. The S&P 500 industrials index again recorded a closing record.
Technology stocks also rose, led by chipmakers. The world’s leading maker of advanced artificial intelligence chips, TSMC, forecast robust annual growth and indicated more U.S. manufacturing capacity is in the works. TSMC’s US-listed shares rose 4.4%.
An index of semiconductors rose 1.8%. Shares of Nvidia, Broadcom and chip maker Applied Materials all rose. The Dow Jones Industrial Average rose 292.81 points, or 0.60%, to 49,442.44, the S&P 500 gained 17.87 points, or 0.26%, to 6,944.47 and the Nasdaq Composite gained 58.27 points, or 0.25%, to 23,530.02.
In technology, “there was some concern around valuations — that they were getting a little too far ahead of themselves,” said Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm based in Toledo, Ohio.
“That was crushed a little bit this morning by the news from Taiwan Semiconductor.”
Highly valued technology and growth stocks have lost some momentum lately as investors started the year chasing bargains.
Both mid-caps and the small-cap Russell 2000 have outperformed the S&P 500 so far this year. The Russell 2000 hit a recent all-time high.
The equal-weighted S&P 500 is up about 4% since late December, versus a 1.4% gain for the S&P 500.
Among other financial firms, BlackRock, the world’s largest asset manager, gained 5.9% after a rally in the markets boosted fee income and pushed assets under management to a record $14.04 trillion in the fourth quarter.
The banks’ results effectively kicked off the US fourth-quarter earnings season. The season gets underway next week and a more diverse group of companies will report back.
Volume on U.S. exchanges was 19.12 billion shares, compared to the full-session average of 16.81 billion over the past 20 trading days.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 1.92 to 1. There were 759 new highs and 55 new lows on the NYSE.
On the Nasdaq, 2,683 stocks rose and 2,137 fell as advancing issues outnumbered declining stocks by a 1.26-to-1 ratio.
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