Meridian Energy (up 5.74 per cent), Cochlear (up 4.44 per cent) and Worley (up 4.23 per cent) were among the best performing mega-cap stocks.
The big four banks all rallied, with shares in CBA up 1.15 per cent, NAB up 1.03 per cent, Westpac up 0.58 per cent and ANZ up 0.84 per cent.
The laggards
Energy (down 0.52 per cent) was the weakest performing sector, dragged down by Woodside (down 0.4 per cent), Santos (down 0.94 per cent) and Whitehaven Coal (down 1.68 per cent).
REA Group recorded the greatest declines among large-cap stocks after its shares slumped 4.18 per cent, followed by EBOS Group (down 3.67 per cent) and BlueScope Steel (down 2.38 per cent).
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Other sectors in the red include consumer staples (down 0.45 per cent) and communication services (down 0.33 per cent).
The lowdown
AMP chief economist Shane Oliver said while only a handful of local companies had posted their half-yearly earnings, investors had so far reacted positively to the reporting season.
“Even though expectations for rate cuts are getting pushed out, the market is not too worried because the US and global economies are doing OK,” Oliver said.
“Financials were the biggest contributor to the rally. There’s ongoing enthusiasm regarding CBA and optimism about earnings results next week.”
On Wall Street, the S&P 500 closed 0.8 per cent higher at 4995, having moved as high as a fraction of a point away from its latest milestone. The Dow Jones added 0.4 per cent and the Nasdaq composite was up 1 per cent.
A relatively calm day in the bond market helped keep things smooth for the stock market, despite some concerns about investors’ ability to digest a $US42 trillion ($64.4 trillion) auction of 10-year Treasuries by the US government.
Underneath the surface, though, were still some very sharp moves. New York Community Bancorp went from an initial gain to a steep loss of 14 per cent and back to a gain of 6.7 per cent. It’s the latest dizzying swing for the bank, which is still down nearly 60 per cent since rattling investors across the industry last week with a surprise loss.
The bank is struggling with challenges related to its acquisition of Signature Bank, which was one of the lenders that collapsed in last year’s mini-crisis for the industry. But New York Community Bancorp is also feeling pain from a problem dogging banks worldwide: weakness in commercial real estate.
Moody’s downgraded the bank’s credit rating late on Wednesday to “junk” status from the lowest tier of investment-grade. Analysts also said they were concerned about the departures of the bank’s key risk and audit executives.
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New York Community Bancorp’s stock then went on a wild ride in off-hours trading, sinking and then rising after it said it had increased its deposits, and provided details about how much cash it has on hand.
Stocks of other regional American banks have been caught up in the drama to a lesser degree, which has brought back uncomfortable memories of last year’s banking crisis. The KBW Nasdaq Regional Banking index swung from a loss during the day to a gain of 0.1 per cent.
UBS analyst Brody Preston said New York Community Bancorp’s latest quarterly loss and dividend cut were due to problems related specifically to it, and “are not necessarily a proverbial canary in the coal mine for other banks in the space”. But attention is likely to remain on potential losses for banks tied to commercial real estate, particularly after Treasury secretary Janet Yellen recently highlighted them as a concern.
Elsewhere on Wall Street, Chipotle Mexican Grill rose 7.2 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected. Its restaurants sold more meals to customers than they did a year earlier.
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Ford Motor climbed 6.1 per cent following its better-than-expected results, while Enphase Energy soared 16.9 per cent despite falling just shy of forecasts. Investors are hopeful that weakness in demand for the supplier of solar and battery systems is nearing a bottom.
Enphase’s gains helped offset a 9.7 per cent drop for VF Corp, the company behind Vans, The North Face and other brands. It reported weaker results than analysts expected.
Snap tumbled 35.2 per cent after its fourth-quarter revenue fell short of analysts’ expectations. The company behind Snapchat also gave a tepid forecast for 2024 after saying on Monday that it was laying off 10 per cent of its workforce.
In the bond market, Treasury yields were holding relatively steady. The yield on the 10-year Treasury edged up to 4.10 per cent from 4.09 per cent late on Tuesday. It’s been on a jagged run recently as signals of a remarkably resilient economy force traders to push back forecasts for when the Federal Reserve may cut interest rates.
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