Wall Street rose on Wednesday as a higher profit outlook from bank State Street Corp reinforced hopes of a better-than-expected earnings season and trumped fears of slower global economic growth.
Banks rallied after heavy losses in recent weeks, with the KBW bank index <.BKX> up 1.8 percent as State Street's forecast reinforced expectations that banks without exposure to trading would perform well in the coming earnings season.
The earnings data provided by State Street is one of the key factors boosting the market today, said Nick Kalivas, an analyst at MF Global in Chicago. Kalivas said investors were starting to reposition for earnings season next week.
The Dow Jones industrial average <.DJI> gained 71.30 points, or 0.73 percent, to 9,814.92. The Standard & Poor's 500 Index <.SPX> gained 9.57 points, or 0.93 percent, to 1,037.63. The Nasdaq Composite Index <.IXIC> gained 20.91 points, or 1.00 percent, to 2,114.79.
State Street , the world's second-largest custody bank, forecast its second-quarter operating earnings to beat analysts' expectations, which reinforced hopes of strong earnings from some financials and sent the bank's shares up 9.5 percent to $36.50.
The S&P 500 index has fallen around 15 percent since a recent peak on April 23 and is down 7.5 percent since the start of the year as fears about the economy have weighed on stocks. Selling has been heavy in recent weeks on signs of a slowdown in the U.S. recovery.
Bringing its S&P 500 index year-end target more into line with the market, UBS lowered its forecast to a level of 1,150 from 1,350 to reflect modestly weaker earnings growth and longer-term secular headwinds.
Family Dollar Stores Inc on Wednesday posted higher quarterly profit as customers sought cheaper products in the face of high unemployment, but the discount chain forecast fourth-quarter earnings below expectations.
The shares fell 7.8 percent to $36.35 and were a drag on the retail sector.
BP Plc Chief Executive Tony Hayward met with officials from Abu Dhabi's investment authority as speculation mounted the sovereign fund would make a fresh investment. BP's New York-traded shares rose 3.2 percent to $32.95.
(Editing by Padraic Cassidy)