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Wall Street stocks were boosted on Tuesday by gains in stocks of major banks, after Morgan Stanley and Bank of America added it to the list of companies reporting second-quarter earnings.
The S&P 500 closed up 0.7 percent, while the KBW Banking Index added 3 percent.
Morgan Stanley rose more than 6 percent, making it one of the top performers in the S&P 500, after CEO James Gorman predicted the bank would eventually triple its assets under management even as quarterly earnings fell on the back of lower fixed-income trading returns.
Bank of America shares rose more than 4 percent after better-than-expected second-quarter earnings. Charles Schwab was the best performer in the benchmark, jumping nearly 13 percent as the broker and bank reported slowing deposit outflows.
The rise in bank stocks came despite persistent investor concerns about lenders’ balance sheets, with the KBW Bank index down about 15 percent since the start of the year after several regional banks collapsed in the spring.
Separately on Tuesday, data from the US Census Bureau showed that retail sales rose 0.2 percent in June. That was weaker than economists’ expectations for a 0.5 percent increase, but added to evidence that domestic consumption remains strong despite pressure from rising interest rates and inflation.
However, the broader picture is that growth in consumer spending has weakened significantly since the Fed began aggressively raising interest rates; “There is more of a downward turn ahead,” said Kieran Clancy, chief US economist at Pantheon Macroeconomics.
The US technology-focused Nasdaq Composite Index rose 0.8 percent on Tuesday.
The yield on two-year Treasury notes, which is affected by changes in interest rate expectations, rose 0.03 percentage point to 4.76 percent, while the benchmark 10-year yield stood at 3.80 percent. Bond yields fall as prices rise.
European stocks rose on Tuesday after European Central Bank (ECB) governing council member Claes Nott signaled that policymakers may soon halt their aggressive monetary tightening campaign: he said a price hike after next week’s meeting is not a guarantee.
The European Stoxx 600 rose 0.6 percent, recouping losses from the previous session, while France’s CAC 40 and Germany’s DAX advanced 0.4 percent.
Shares of London-listed online retailer Ocado jumped 19 percent, topping the Stoxx 600 index, after the company said its retail division was “making good progress, with a return to profitability” in the second quarter.
Asian stocks extended their declines on Tuesday, with the Hang Seng index falling 2.1 percent after Hong Kong markets resumed trading after a day-long hiatus caused by a storm.
China’s CSI 300 index of mainland-listed stocks fell 0.3 percent and South Korea’s Kospi index fell 0.4 percent. Japan’s Topix was the most mixed in the region, rising 0.6 percent.