Sun, Oct 02, 2016 - Page 14 News List

Deutsche Bank, financials lead a rally in US equities

REDUCED FINE?The bank is reportedly nearing a US$5.4 billion settlement with the US Department of Justice over charges related to selling toxic mortgage bonds

Reuters, NEW YORK

US stocks rallied on Friday, lifted by a surge in Deutsche Bank shares and financial stocks after concerns eased about the health of the German bank.

The S&P financial sector gained 1.4 percent, its best day in about two months.

Deutsche Bank’s US-listed shares jumped 14 percent a day after sinking to a record low.

Agence France-Presse reported that Deutsche Bank was nearing a US$5.4 billion settlement with US officials over charges related to selling toxic mortgage bonds.

Germany’s largest bank has been engulfed by crisis after earlier this month receiving a demand for up to US$14 billion by the US Department of Justice.

US stocks had sold off sharply on Thursday, after Bloomberg reported that some hedge funds had withdrawn excess cash and positions held at the German lender.

“The rumors that are out there that Deutsche Bank is going to get a better deal ... I think is adding some positive effect into the market,” said Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York.

“I think people were fearful and concerned about what the outcome of this is going to be,” he said.

The Dow Jones industrial average rose 164.7 points, or 0.91 percent, to 18,308.15; the S&P 500 gained 17.14 points, or 0.8 percent, to 2,168.27; and the NASDAQ Composite added 42.85 points, or 0.81 percent, to 5,312.

Bank stocks boosted the S&P. Bank of America and Citigroup each climbed more than 3 percent and JPMorgan rose 1.4 percent.

Goldman Sachs’ 1.5 percent increase gave the Dow its biggest boost.

Eight of the 11 major sectors ended higher. Energy shares climbed 1.3 percent, with oil prices recording big weekly gains.

With Friday’s increases, the three major stock indices recorded their third straight week of gains.

The Deutsche Bank situation created a fresh risk for investors, who will be watching third-quarter corporate earnings and the upcoming US presidential election on Nov. 8 for reasons to buy or sell stocks.

For the year, the benchmark S&P 500 is up about 6 percent, with US equities benefiting from low interest rates around the world.

In other company news, Cognizant shares plummeted 13.3 percent, making it the biggest loser among S&P 500 firms. The information-technology services provider said it was conducting an internal investigation on possible violations of US anti-corrupt practices laws related to payments in India.

About 7.5 billion shares changed hands on US exchanges, above the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered declining ones on the NYSE by a 2.4-to-1 ratio.

On the NASDAQ, a 2.69-to-1 ratio favored advancers.

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