By Yasin Ebrahim
Investing.com - Wall Street closed higher Thursday, as bank stocks jumped ahead of stress tests on reports regulators are set to loosen bank restrictions on investing activities.
The Dow Jones Industrial Average rose 1.18%, or 299 points, the S&P 500 gained 1.14%, while the Nasdaq Composite was up 1.09%.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS), and Bank of America (NYSE:BAC) were up more than 3% after Federal Deposit Insurance Commission officials reportedly said they would loosen restrictions from the Volcker Rule, a post-financial crisis law designed to stop banks - which received federal and taxpayer bailouts - from engaging in risky trading activities.
Regulators will also ease margin requirements for swaps trades that could free up an estimated $40 billion for Wall Street banks, Bloomberg reported.
The move higher in bank stocks comes ahead of the Federal Reserve's annual stress test of big banks, which started in 2009 and is supposed to show what happens to their balance sheets – in terms of losses and capital levels – under an extreme hypothetical scenario.
But upside momentum remained challenged on concerns about disruptions to economic reopening efforts as coronavirus cases continue to mount.
Following a recent record rise in daily cases in the state, Texas Governor Greg Abbott put the next phase of reopening on hold.
Coronavirus-related hospitalizations in the state have almost doubled since June 14, when the number was at 2,287.
Concerns are mounting that other pockets of the U.S. including Florida, Arizona, and California could also follow suit as new infections reached 38,115 nationwide on Wednesday, the highest since the pandemic began.
The wave of new infections come as mixed economic data did little to renew expectations over a quick snapback in growth in the second half of the year.
The U.S. Department of Labor reported Thursday that initial jobless claims decreased by 60,000 to 1.5 million in the week ended June 12, missing forecasts for a 240,000 decline.
"Today's report does not offer much confidence that we will see a strong jobs number when the June NFP data is released at the beginning of next month," Jefferies (NYSE:JEF) said in a note.
The Commerce Department said on Wednesday core durable goods orders rose 4% last month, beating economist forecasts for a 2.5% rise.
Energy rebounded from a rout a day earlier even as oil prices moved off session lows.
In tech, meanwhile, Apple (NASDAQ:AAPL) closed up 1.3%. The tech giant announced that it was closing 14 stores in Florida after the state recorded a jump in Covid-19 cases.
On the earnings front, KB Home (NYSE:KBH) fell 11.9% after posting mixed quarterly results a day earlier, as revenue fell short of estimates on weaker than expected second-quarter orders.