By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Friday, led by banking stocks that were bolstered by expectations of share buybacks later in the year after the Federal Reserve said it would lift the current ban.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was up 148 points, or 0.5%, at 32,768 points, while the S&P 500 was up 0.4% and the Nasdaq Composite was lagging, with a gain of 0.2%.
Late on Thursday, the Federal Reserve had said it will allow banks to resume buybacks and dividends, as long as they pass its annual stress test, which is expected to wrap up by the end of June. Bank of America (NYSE:BAC) stock rose 1.7% in response, while JPMorgan (NYSE:JPM) stock rose 1.3% and Citigroup (NYSE:C) rose 1.1%. The Fed had last week ended a temporary exemption from capital requirements that had also been introduced last year as the pandemic started. Thursday's announcement creates a certain symmetry to what amounts to a statement that the Fed thinks there is no risk any more of a financial crisis resulting from the economic distress of the last year.
Data published earlier by the Bureau of Economic Analysis had again appeared to support the Federal Reserve's thesis that inflationary pressures in the economy remain muted, as the deflator for core personal consumer expenditures edged down to 1.4% on the year from 1.5% in Februar. The PCE deflator is the Fed's preferred measure of inflation, and is faster to adjust to changes in consumer spending patterns such as those seen over the last year.
The data come a day after initial jobless claims fell to their lowest since the start of the pandemic, and a day after President Joe Biden announced a ramp-up of vaccinations against Covid-19 that will now see 200 million jabs administered to Americans by the end of April. Such progress is key to reopening the economy without risking a fresh wave of Covid-19, and is in stark contrast the to infection wave building in the European Union, which has been slower to immunize its population.
Among individual movers, L Brands (NYSE:LB) stock rose 6.8% to a new five-year high after the owner of Victoria's Secret raised its profit guidance with a nod to the latest fiscal stimulus package.
Chinese electric car maker Nio's (NYSE:NIO) ADRs fell 6.2% after it cut its production guidance due to the global shortage of semiconductors, which is forcing it to idle its main factory.
Elsewhere, GameStop Corp (NYSE:GME) stock extended its rebound, gaining 17% on top of its nearly 60% rise on Thursday as its loyal army of retail investors absorbed the shock of a prospective capital increase.
Chinese Internet giants Baidu (NASDAQ:BIDU) and Tencent Music both fell on reports of large block trades being offered by Goldman Sachs (NYSE:GS), while Fox (NASDAQ:FOX) stock fell 2.0% after Dominion, the maker of voting machines, became the second company to sue it for its coverage of the 2020 election.