On Wednesday U.S. stocks continued their rise after being boosted by banks renewing investor hopes in the financial sector.
The Dow Jones Industrial Average is coming off a 379-point surge, its biggest gain in more than four months. At about 12:10 p.m. EDT, the Dow was up 30 points at about 6956, after briefly reclaiming the 7000 mark.
Among the blue-chip measure's big winners were Citigroup, whose statement on Tuesday that in January and February it earned revenue of $19 billion, a stark contrast from the previous quarters of losses. Bank of America, which has also recently stated it was able to battle the economic obstacles.
Citi stocks rose by more than 4%, while Bank of America rose up 3%.
The two blue-chip banks had been considered candidates for nationalization, which would likely wipe out private shareholders. While those fears have subsided, participants remain on guard about the market's overall prospects, keeping in mind the disappointment following previous rallies that have all failed to sustain themselves since major indexes hit records in October 2007.
Almost everyone believes that what we've seen is a dead-cat bounce, or a fleeting round of gains in a bear market, said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va, Market Watch reported.
But if those two banks can deliver on their recent statements, I think the recent lows for the market will hold up”, he added.
Engelke has bought preferred shares in both Citi and Bank of America on behalf of clients. He's also purchased common stock in the latter since the eruption of the financial crisis last fall, deeming it a bargain in the wake of the market's plunge.
When asked if he felt vindicated at all by Tuesday's big rally, Engelke said: No, I wouldn't say that. I felt better, but I'm still extremely nervous.
Wednesday morning saw stocks trading higher. The S&P 500 rose 0.7%, led by a 3.1% gain in its financial sector. All its other categories traded higher as well. The technology-oriented Nasdaq Composite Index was up 1%.