Stocks Rise 3 Percent on Good News from Federal Reserve

Tuesday’s market performed positively as fears of new US Federal Reserve capital proposals turned out to be misplaced.

Three Diverse Sectors Climbed

Investors fueled the rally with support for the banking sector, home-builders and networking companies, although analysts admit that the market’s upward climb was amplified by relatively low volume.

The stock market realized a 3% rise as the banking sector, which was already gaining points due to the US Federal Reserve’s new capital proposals ended up being not as bad as had been feared, inspired further support.

Banking

The happy stats for the banking sector are as follows: The KBW Banks index jumped 4.1%; JP Morgan Chase & Co jumped 5% to $32.22; and Wells Fargo & Co rallied 4.6% ending at $26.47 per share.

Matt McCormick, one of Cincinnati-based Bahl & Gaynor’s money managers commented that,

“Investors have been looking for clarity on the regulatory outlook, and I don’t think these rules are so strict that we should expect anything like significant dividend cuts.”

Home Builders

Gains were also realized based on positive figures for the housing figures: The Dow Jones home construction index climbed 6%, with the nation’s second largest home builder, Pultegroup, up 10%; and MDC Holding rising by 7.3%.

Networking

The diversified sectors which supported the impressive gain were completed by networking companies.

Ever since 1969 the S&P 500 has gone up by an average of 1.6% during the last five days and the first two days of the year, according to data from the Stock Trader’s Almanac. This fact is known as the Santa Claus rally.

The general outlook for stocks was good as about 86% of stocks traded on the NYSE closed higher, while about 80% of NASDAQ stocks ended the day in positive territory.