7 May 2009

Bank stocks rise on relief about stress test results

9:40 am on 7 May 2009

Stocks in the United States rose on Wednesday after a private sector reading on the labor market signaled unemployment may be receding.

According to a report by ADP Employer Services, the total number of private-sector job losses touched the lowest level since November.

In addition, bank stress test results reportedly indicate most banks are healthier than thought.

The government is due to issue stress test results at 5pm EDT (2100 GMT) on Thursday.

Bank stocks rallied: Citigroup rose more than 16% to $US3.86, Bank of America was up 17.07% to $US12.69 and JPMorgan gained 7% to $US37.22.

The KBW Bank index rose 11.5% and the S&P financial index climbed 8.1%.

The test results will cover 19 major financial institutions. The Wall Street Journal reported that JPMorgan, does not need more capital.

Other news reports suggest the capital shortfalls for Citigroup and others might be less than expected.

Energy shares also rose after US crude oil settled up $US2.50, or 4.64%, at $US56.34 per barrel on the New York Mercantile Exchange.

It was the highest closing price for oil since 14 November.

The Dow Jones industrial average rose 101.63 points, or 1.21%, to 8,512.28.

Standard & Poor's 500 Index climbed 15.73 points, or 1.74%, to 919.53. The Nasdaq Composite Index added 4.98 points, or 0.28%, to 1,759.10.