(By Salman - iStockAnalyst Writer)US stocks rallied on Wednesday as investors drew a sigh of relief after stress test results indicated that most banks are healthier than thought. Better than expected ADP payrolls data also added to the positive tone.
The Dow Jones Industrial Average gained 101.63 points or 1.21% to finish at 8,410.65. The S&P 500 added 4.98 points or 0.28% to end at 1,759.10. The Nasdaq Composite advanced 15.73 points or 1.74% to 1,759.10.
ADP survey on Wednesday reported that a total of 491,000 private-sector jobs were lost in April. Economists had projected a drop of 645,000 private sector jobs.
Shares of financials skyrocketed on optimism that big U.S. banks will comfortably find the capital they need to meet government requirements. Bank of America (NYSE:
BAC) rallied $1.85 or 17.07% to $12.69. According to media reports, Bank of America Corp. would require about $34 billion in fresh capital as a result of its U.S. government stress test. Citigroup (NYSE:
C) surged 53 cents or 16.01% to $3.84. The New York Times said that Citigroup will have to raise $5 billion to $10 billion in new capital to meet U.S. government requirement. Wells Fargo & Co.(NYSE:
WFC) soared $3.62 or 15.59% to $26.84. According to Bloomberg, Wells Fargo will need about $15 billion in capital following a U.S. government-led stress test. JP Morgan (NYSE:
JPM) and American Express (NYSE:
AXP) gained 6.89% and 2.18% respectively. JPMorgan Chase, Morgan Stanley (NYSE:
MS) and Goldman Sachs Group Inc. (NYSE:
GS) will not be asked to raise additional capital when federal officials announce the test results, media reports added.
Results of the stress tests conducted by government officials, the Federal Reserve on the 19 largest U.S. financial companies will be released on May 7 publicly. According to the Wall Street Journal, about 10 of the 19 largest U.S. banks being stress tested will be asked by regulators to raise additional capital.
Among energy stocks Chevron Corp. (NYSE:
CVX) jumped $2.36 or 3.59% to close at $68.11. Exxon Mobil (NYSE:
XOM) rose 89 cents or 1.31% to $68.58.
The largest US aluminum maker Alcoa Inc.
