US stocks marked record highs at midsession on Thursday, after positive earnings data in the banking sector and brushed off the Bank of England’s surprise decision to leave rates on hold.
The market bellwether S&P 500 index hit a fresh intraday record high on Thursday and was poised for its longest winning streak since March after an earnings beat by bank JPMorgan Chase & Co. (NYSE:JPM) sent shares up 1.8% to $64.30 and helped buoy the financials sector. The S&P 500 hit a new high of 2,168.99 intraday and was last seen up 0.4% at 2,160.
The bank earnings season got underway with a bang, after JPM topped second-quarter estimates with a profit of $1.55 per share, compared with estimates of $1.43 a share.
The UK’s central bank, already holding rates at a 300-year low of 0.5% since 2009, decided that more data was necessary post-Brexit to assess whether a rate cut was necessary. Meanwhile, some strategists argued that to cut would have smacked of panic and with sterling on the slide for three weeks that was stimulus enough for the economy.
A rate cut could follow in August, however, and the Bank also warned again that house prices were set for a “sizeable fall” following the UK’s referendum vote to quit the European Union last month.
But in a sign that normality in foreign affairs was returning after weeks of bickering, both Wolfgang Schauble, the German finance minister, and Jack Lew, the US Treasury Secretary, sent conciliatory messages to London calling for constructive relations after the Brexit vote.
Speaking at a joint press conference in Berlin, they said the world economy would be best served by the development of good ties between the UK and the rest of the EU.
The S&P midcap 400 was up 0.25% at 1,544. Earlier it touched 1,551 – a record high. The top gainer was Cree Inc (NASDAQ:CREE) up 12.3% to $28.17.
The S&P Smallcap 600 advanced 0.2% to 740. Earlier it touched 744 – a new record high since the ticker was introduced in August 1995. The top gainer was Harsco Corp (NYSE:HSC), up 10.6% to $8.90.
Open
US futures had been higher and so stocks rose on the open to new highs as traders cheered positive data and brushed off the BoE's decision to keep interest rates on hold.
US crude also rose over 1.2% to US$45.27 after falling yesterday, prompting a rise in energy shares.
At the time of writing, the Dow Jones is up 158 points, or 0.85% to 18,529, while the tech heavy Nasdaq added 0.68% to 5,040.
The S&P500 added 0.73% to 2,168.
In the UK, FTSE100 is just holding onto gains, up 0.13% to 6,6769.
It comes after the Bank of England unexpectedly stood pat on interest rates, at 0.5%, after the majority of commentators were expecting a cut.
However, the Central Bank did issued a warning on the potential impact of the UK's decision to leave the EU, reportedly saying it expected "sizeable falls in house prices".
Monetary policy may loosen at the next meet in August, once it has had more time to assess the impact of the vote on activity.
Adrian Lowcock from AXA Wealth said: "... the outlook for interest rates are still towards a further cut, possibly as soon as August, as early indicators point to weakening consumer and business confidence and a significant slowdown in activity in the housing market.”
Yesterday, US stocks skidded to a flat finish on Wednesday, recovering from an earlier dip after US oil stockpiles eased less than expected.
The market bellwether S&P 500 index closed up 0.01% at 2,152, while the S&P Midcap 400 ended 0.2% lower at 1,540, weighed down by oil stocks.