Financial shares led the stock market higher Wednesday as heads of several big Wall Street banks testified before a committee set up to investigate the causes of the financial crisis. Although several executive admitted to missteps that led to the financial mayhem, the hearing, barring a few aggressive exchanges, went on with little confrontation.
Executives appearing before the bipartisan Financial Crisis Inquiry Commission included Goldman Sachs’ (NYSE:GS) Lloyd Blankfein, Bank of America’s (NYSE:BA) Brian Moynihan, Morgan Stanley’s (NYSE:MS) John Mack and JP Morgan Chase’s (NYSE:JPM) Jamie Dimon.
This morning’s US stock market futures suggest a mixed start in early trade as traders look to bellwethers Intel (NASDAQ:INTC) and JP Morgan’s (NYSE:JPM) numbers, and also word from Washington on the nature of its planned Street tax. Reports suggest the fiscal 2011 budget, to be unveiled at 11:50 am this morning, will place a levy of 15 bps, or 0.15 percentage points, on balance sheets of large firms with assets of more than $50 billion. The plan is expected to raise $90-$120 billion over the first ten years.
Yesterday, the Dow Jones industrial average rose 53.51 points, or 0.50%, to 10,680.77, closing at its highest level since October 1, 2008. The broader Standard & Poor’s 500-stock index rose 9.46 points, or 0.83%, to 1.145.68, and the Nasdaq rose 25.59 points, or 1.12%, to 2,307.90.
Merck & Co. (NYSE:MRK) led the healthcare sector higher and was the leading gainer on the DJIA, helped by a Credit Suisse (NYSE:CS) upgrade to “outperform” from “neutral.” Credit Suisse cited “new interest” coming from the company’s pipeline for the upgrade.
The 10-month old rally in the stock market has driven the S&P500 69% from its 12-year closing lows of early March. Rising risk appetites have sent stock markets higher as central banks worldwide have adopted accommodative policy measures. However, signals that China is moving towards a tighter lending regime raised a red flag on prospects for rising interest rates.
The Treasury is scheduled to auction the final leg of its $84 billion issuance this week, with $13 billion in 30-years. Yesterday’s $21 billion in 10-years met with uninspiring demand, and Treasuries fell in price on the day, with the 10-year closing off 20/32 as its yield rose to 3.793%.
This morning New York Fed President Dudley noted the “extended period” of low interest rates will likely be translated into more than six months and possibly two years.
