U.S. stocks are climbing Friday and regaining the previous day’s losses. Banks are recovering from a sharp drop as Deutsche Bank tries to reassure investors about its financial health. Strong earnings from Costco are giving consumer stocks a lift and energy companies are also trading higher.
KEEPING SCORE: The Dow Jones industrial average jumped 200 points, or 1.1 percent, to 18,343 as of 2:30 p.m. Eastern time. It lost 195 points the previous day. The Standard & Poor’s 500 index rebounded 22 points, or 1 percent, to 2,172. The Nasdaq composite rose 52 points, or 1 percent, to 5,321.
DEUTSCHE BANK: Banks made the largest gains Friday as investors hope Deutsche Bank will be able to negotiate down the massive cost of settling a U.S. investigation.
The German bank has struggled for years to turn its business around and the Department of Justice wants it to pay $14 billion to end an investigation into mortgage-backed securities.
“(A fine of) $14 billion basically wipes out their earnings for the year,” said Nathan Thooft, head of global asset allocation for Manulife Asset Management. If the bank agrees to a smaller payment, it would be a big relief to investors.
Deutsche Bank’s U.S.-listed stock rose $1.70, or 14.8 percent, to $13.18. The stock has been pummeled this year and is trading near all-time lows.
BANKS REBOUND: Financial stocks had tumbled Thursday afternoon as investors again worried about the Deutsche Bank’s health following reports that some hedge funds are moving their business out of the bank.
Deutsche Bank is the largest lender in Germany, and investors are worried not just about its stock price, but the effect on the financial system if Deutsche Bank runs into serious trouble and the German government does not help it.
Thooft said he does not think banks are in great danger, but he said there are problems to worry about, including the health of Italy’s banks. Meanwhile, with interest rates so low and increased regulation, there’s little reason for investors to buy bank stocks.
Among U.S. banks, JPMorgan Chase added $1.13, or 1.7 percent, to $66.78 and Citigroup gained $1.60, or 3.5 percent, to $47.40.
BIG SALE: Warehouse club operator Costco Wholesale jumped $5.85, or 4 percent, to $153.34 after it reported a profit that was larger than analysts expected. Companies that make and sell household necessities also climbed. Procter & Gamble gained $1.47, or 1.7 percent, to $89.70 and Wal-Mart rose $1.64, or 2.3 percent, to $72.37.
OIL: Benchmark U.S. crude oil rose 41 cents to $48.24 a barrel in New York, and it rose 8 percent over the last three days. Brent crude, the international standard, slipped 18 cents to $49.06 a barrel in London.
Oil prices have surged this week after the nations of OPEC, which collectively produce more than one-third of the world’s oil, surprised investors with an agreement on a small cut in production. While the gains for oil prices have slowed, investors were still optimistic that energy companies will book larger profits as a result. Chevron jumped $1.95, or 1.9 percent, to $103.22 and EOG Resources rose $1.88, or 2 percent, to $96.93.
OTHER ENERGY TRADING: Wholesale gasoline picked up 2 cents to $1.49 a gallon. Heating oil rose 2 cents to $1.51 a gallon. Natural gas slipped 5 cents to $2.91 per 1,000 cubic feet.
COGNIZANT: Cognizant Technology Solutions tumbled after the information technology consulting and outsourcing firm said it’s investigating possible bribes paid to officials in India. Cognizant said it’s looking into potential violations of the Foreign Corrupt Practices Act and has informed the Department of Justice and the Securities and Exchange Commission.
Cognizant also said its president Gordon Coburn resigned. It named Rajeev Mahta, the former head of its IT Services business, as its new president. The stock fell $6.40, or 11.6 percent, to $48.60.
CHIPPING IN: Qualcomm and NXP Semiconductors continued to climb on reports the companies might combine. The Wall Street Journal said Qualcomm is in talks to buy its rival, and NXP gained $6.36, or 6.6 percent, to $102.49 and Qualcomm picked up $1.38, or 2 percent, to $68.83. NXP surged 17 percent Thursday and Qualcom rose 6 percent.
TECH TRIUMPHANT: Major stock indexes set records this quarter, and tech stocks were by far the biggest reason. The S&P 500 technology index climbed 13 percent over the last three months. Apple surged 18 percent, partly on indications of strong sales for the newest iPhones. Apple is the most valuable publicly-traded company in the world and Microsoft, the second-largest company on the S&P 500, is up 13 percent this quarter. Another tech giant, Google parent Alphabet, leaped 15 percent.
BONDS: Bond prices sank. The yield on the 10-year Treasury note rose to 1.60 percent from 1.56 percent. That sent stocks that pay high dividends, like utilities and real estate companies, lower than the rest of the market.
METALS: Gold fell $8.90 to $1,317.10 an ounce. Silver rose 3 cents to $19.21 an ounce. Copper gained 2 cents to $2.21 a pound.
CURRENCIES: The dollar rose to 101.37 yen from 101.07 yen. The euro rose to $1.1233 from $1.1216.
OVERSEAS: Germany’s DAX climbed 1 percent and France’s CAC 40 added 0.1 percent. The FTSE 100 in Britain lost 0.3 percent. Major indexes in Asia slumped on concerns about the banking industry. Japan’s Nikkei 225 slumped 1.5 percent and South Korea’s Kospi fell 1.2 percent. Hong Kong’s Hang Seng index sank 1.9 percent.
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