* Banks rise on steepening yield curve
* Apple, Amazon, Facebook lead tech rebound
* KB Home, General Mills rise after strong quarterly
* Indexes up: Dow 0.73 pct, S&P 0.84 pct, Nasdaq 1.07 pct
(Updates to early afternoon)
By Tanya Agrawal
June 28 (Reuters) – The S&P 500 and the Dow Jones Industrial
Average were on track for their best one-day percentage gain in
about two months on Wednesday as financial stocks led a broad
rally, while the Nasdaq rose more than 1 percent as tech stocks
Bank stocks gained as the yield between five-year notes and
30-year bonds steepened, after falling to their lowest level
since late 2007 overnight.
Bond prices rebounded, following a Reuters report that the
market had overinterpreted chief Mario Draghi’s comments that
the ECB was ready to start withdrawing the emergency stimulus
for the economy.
The financial index’s 1.65 percent rise led the
gainers, with Bank of America, JPMorgan boosting
the S&P, while Goldman Sachs helped lift the Dow.
At 12:39 p.m. ET (1639 GMT), the Dow Jones Industrial
Average was up 156.53 points, or 0.73 percent, at
21,467.19, the S&P 500 was up 20.43 points, or 0.84
percent, at 2,439.81.
The Nasdaq Composite was up 65.84 points, or 1.07
percent, at 6,212.46.
The tech sector, which has been under pressure recently due
to lofty valuations, was up 0.81 percent.
Apple, Amazon and Facebook were the
top boosts to the Nasdaq.
With investors awaiting second-quarter corporate earnings,
equity valuations have come under focus at a time when
inflation remains low, recent economic data has been tepid and
President Donald Trump’s pro-growth policies face delays.
The S&P 500 is trading at nearly 18 times forward earnings
estimates, well above its long-term average of 15 times.
“Valuations are certainly a little bit elevated and they are
a bit of a concern,” said Randy Frederick, vice president of
trading and derivatives for Charles Schwab in Austin, Texas.
“We saw valuations run up in the first quarter but then when
earnings came out they were pretty solid so ultimately if
earnings continue at the rate we’ve seen recently, then those
valuations will be fine.”
Federal Reserve Chair Janet Yellen said on Tuesday that by
standard metrics, some asset valuations look high while Vice
Chair Stanley Fischer warned that central bank must remain
vigilant in monitoring financial stability risks.
San Francisco Fed head John Williams said investors may be
getting overly complacent about risks and that “the stock market
seems to be running pretty much on fumes.”
Oil futures climbed to their highest in more than a week
despite a surprise build in crude inventories, as buyers were
encouraged by a small weekly decrease in U.S. production.
KB Home was up 3.7 percent at $23.66 after the
homebuilder increased its full-year forecast.
General Mills rose 1.6 percent to $56.46 after the
Cheerios maker’s quarterly profit beat estimates.
Advancing issues outnumbered decliners on the NYSE by 2,346
to 514. On the Nasdaq, 2,137 issues rose and 634 fell.
(Reporting by Tanya Agrawal; Editing by Arun Koyyur)