US STOCKS-Wall Street stocks surge as banks, tech sectors spark rebound

* S&P 500 best day in two months; Nasdaq best day since Nov
7

* Bank stocks gain after hours after Fed clears capital
plans

* General Mills shares rise after quarterly earnings

* Indexes up: Dow 0.68 pct, S&P 0.88 pct, Nasdaq 1.43 pct
(Updates to add bank stocks rising after Fed stress tests in
paragraph 13)

By Lewis Krauskopf

June 28 (Reuters) – Wall Street stock rallied sharply on
Wednesday, with the benchmark S&P 500 index scoring its biggest
one-day percentage gain in about two months, as financial and
technology stocks led a broad market rebound.

The Nasdaq posted its best session since Nov. 7, the day
before the U.S. presidential election.

The S&P 500 had suffered its biggest one-day drop in about
six weeks on Tuesday after a healthcare bill was delayed in the
U.S. Senate.

The healthcare legislation is the first major plank of
President Trump’s domestic policy agenda, with investors eager
for him to move onto his other plans including tax cuts,
infrastructure spending and deregulation.

Investors may be reevaluating the impact of the Senate’s
delay on the market and Trump’s agenda, said Rick Meckler,
president of LibertyView Capital Management in Jersey City, New
Jersey.

“The market has had trouble really appreciating, but it has
had even more trouble declining,” Meckler said. “It seems like
any negative period is very quickly met with new buyers.”

“Interest rates are still very low and a lot of investors
see little opportunity to invest anywhere but in stocks,” he
added.

The Dow Jones Industrial Average rose 143.95 points,
or 0.68 percent, to 21,454.61, the S&P 500 gained 21.31
points, or 0.88 percent, to 2,440.69 and the Nasdaq Composite
added 87.79 points, or 1.43 percent, to 6,234.41.

The small-cap Russell 2000 ended up 1.6 percent.

Financials were the best performing S&P sector,
rising 1.6 percent.

Bank stocks including JP Morgan Chase and Bank of
America helped boost the S&P 500, both rising more than
2.0 percent. The interest rate-sensitive group was helped by an
increase in yields for 10-year Treasuries and by a widening
spread between shorter- and longer-dated U.S. bonds.

“We have had the statements from various Fed officials that
they are still on board with the tightening cycle and that has
been a big driver for finance names,” said Peter Jankovskis,
co-chief investment officer at OakBrook Investments LLC in
Lisle, Illinois.

Bank stocks also were higher ahead of stress test results
from the Federal Reserve and added to those gains in after-hours
trading as the Fed approved plans from the 34 largest U.S. banks
to use extra capital for stock buybacks, dividends and other
purposes.

Tech stocks gained 1.3 percent, surging back from
their worst day in more than two weeks. The sector has led the
S&P 500’s 9-percent gain this year, but has pulled back recently
as some investors question whether the group is too expensive.

The tech-heavy Nasdaq bounced off its 50-day moving average.

With second-quarter U.S. corporate earnings reporting set to
begin in earnest in July, investors are looking for results to
support equity valuations. The S&P 500 is trading at nearly 18
times forward earnings estimates, above its long-term average of
15 times.

In earnings news, General Mills shares rose 1.6
percent after the Cheerios cereal maker reported a
better-than-expected quarterly profit.

Staples shares rose 8.4 percent. The company will
announce its sale to private equity firm Sycamore Partners, a
person familiar with the matter said on condition of anonymity.

Advancing issues outnumbered declining ones on the NYSE by a
3.18-to-1 ratio; on Nasdaq, a 3.29-to-1 ratio favored advancers.

About 6.7 billion shares changed hands in U.S. exchanges,
below the 7.2 billion daily average over the last 20 sessions.
(Additional reporting by Kimberly Chin in New York and Tanya
Agrawal in Bengaluru; Editing by Arun Koyyur and Nick Zieminski)


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