Wall Street rallies on back of big tech, banks

NEW YORK, May 23 (Reuters) – US stocks ended higher on Monday as gains from banks and a rebound in market-leading tech shares supported a broad-based rally following Wall Street’s longest streak of weekly declines since the dotcom bust more than 20 years ago.

All three major US stock indexes advanced between 1.6% and 2.0%, with the heftiest boost coming from rebounding megacap tech stocks Apple Inc. (AAPL) and Microsoft Corp. (MSFT).

Interest rate-sensitive banks jumped 5.1% after the largest US lender, JPMorgan Chase & Co. (JPM) raised its current year interest income outlook.

JPMorgan Chase’s stock surged 6.2%.

“It feels like a relief rally more than a fundamental change in investor sentiments,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “Investors as a whole feel like there’s another shoe to drop and they’re probably right in the short term.”

On Friday, the S&P 500 closed 18.7% below its record closing high reached on Jan. 3. If the benchmark index closes 20% or more below that record, it will confirm it has been in a bear market since then.

Markets have been roiled in recent weeks by worries about persistently high inflation and aggressive attempts by the Federal Reserve to rein it in while the global economy copes with fallout from Russia’s invasion of Ukraine.

“Today it would appear the market is less fearful over the inflation factor and the Fed being able to orchestrate a soft landing so to speak,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

But “the bias is still to the downside,” Carlson added.

The Dow Jones Industrial Average rose 618.34 points, or 1.98%, to 31,880.24, the S&P 500 gained 72.39 points, or 1.86%, to 3,973.75 and the Nasdaq Composite added 180.66 points, or 1.59%, to 11,535.28.

The Fed will give investors a hint of its state of mind on Wednesday, when it releases minutes from its latest policy meeting.

Economic indicators this week might lend further support to the notion that inflation peaked in March, and show whether high prices have hurt consumer spending power.

All 11 major sectors of the S&P 500 ended the session green, with financials enjoying the largest percentage gain, advancing 3.2%

First-quarter reporting season is nearly a wrap, with 474 of companies in the S&P 500 having posted results. Of those, 78% beat expectations, according to Refinitiv.

Looking ahead, current quarter pre-announcements are generally pessimistic, with 59 negative projections and 32 positive, compared with the year-ago quarter’s 37 negative and 52 positive, per Refinitiv.

Shares of VMWare Inc. (VMW) surged 24.8% following reports over the weekend that chipmaker Broadcom Inc. (AVGO) was in talks to acquire the cloud service provider. Broadcom dropped 3.1%.

US-listed shares of Chinese ride-hailing app Didi Global (DIDI) dropped 4.0% after shareholders voted in favor of de-listing from the New York Stock Exchange.

Advancing issues outnumbered declining ones on the NYSE by a 2.43-to-1 ratio; on Nasdaq, a 1.44-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 31 new lows; the Nasdaq Composite recorded 27 new highs and 142 new lows.

Volume on US exchanges was 10.93 billion shares, compared with the 13.36 billion average over the last 20 trading days.

(Reporting by Stephen Culp; additional reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by David Gregorio)