Renowned banking analyst Dick Bove’s positive comments on Citigroup and strength in technology shares helped lift stocks Wednesday even as buying remained subdued in the absence of market-moving catalysts.
The Dow Jones industrial average advanced 3 points, or about 0.03%, to close at 10,567. Gains in the blue-chip index were led by Boeing (NYSE:BA), which rose 3.3% on hopes the company will be able to win the $35 billion U.S. Air Force contract to build aerial refuelling tankers. The S&P 500 index gained 5 points, or 0.5%, to 1,145.61. The tech-heavy Nasdaq composite index added 18.27 points, or 0.8%, to its Tuesday’s tally to close at an 18-month high of 2,358.95. On the New York Stock Exchange, advancing issues beat those that declined in price by a two-to-one margin on volume of 961 million shares.
News that China inflation rose to a 16-month high of 2.7% in February from a year ago, versus forecasts of a 2.5% rise, has caused some concern this morning and garnered speculation of another round of monetary tightening. Meanwhile, the Treasury Department reported a $42.6 billion shortfall brought the February budget deficit to a record $220.9 billion, up from $193.9 billion a year ago, and above estimates of $220 billion.
Bove’s comments that Citigroup’s (NYSE:C) stock is likely to keep rising sent shares in the company up more than 3.5%. The shares have risen 12% in last five days. Rumors also noted Apollo Management may purchase Citi’s real estate unit. Bove appeared confident on the strength of the banking sector and noted dividend payout ratios in banks are going to go back up to 40% in two to three years from now. Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM) also rose and were among the leading gainers on the Dow. AIG (NYSE:AIG), not a Dow component, surged more than 10%, helped by its recent asset sales.
Intel (NASDAQ:INTC) share rose 1.2%, while Cisco (NASDAQ:CSCO) declined 1.0% after its new router announcement on Tuesday. Google (NASDAQ:GOOG) shares jumped almost 3% after the company opened an online apps store, the Google Apps Marketplace, and on reports its contentious arguments with China could be nearing a solution.
Of the ten S&P500 sectors, only two, consumer goods (-0.1%) and telecommunications (-0.04%), closed lower. Financial shares gained 1.1% after Bove’s comments. Some reports suggested Barclays (NYSE:BCS) is planning to acquire a retail bank; firms considered to be the target include Fifth Third (NASDAQ:FITB), PNC (NYSE:PNC), Sun Trust (NYSE:STI), and Comerica (NYSE:CMA).
Companies reporting their earnings include National Semiconductor (NYSE:NSM), Smithfield Foods (NYSE:SFD), Aeropostale (NYSE:ARO), Pall Crop (NYSE:PLL), and Pacific Sunwear of California (NASDAQ:PSUN).