(Reuters) – Wall Street was higher in late morning trading on Wednesday as financial and consumer stocks led a broad rally among the major sectors.
Bank stock reflected a rise in treasury yields, following a Reuters report that the market had overinterpreted chief Mario Draghi’s comments that the ECB was ready to start withdrawing the emergency stimulus for the economy.
The sources clarified that Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening.
The financial index’s 1.16 percent rise led the gainers, with Bank of America, JPMorgan and Citigroup all up more than 1 percent.
The consumer discretionary index rose 0.9 percent, helped by a gain in Walt Disney, Comcast and Amazon.
At 10:57 a.m. ET (1457 GMT), the Dow Jones Industrial Average was up 126.57 points, or 0.59 percent, at 21,437.23, the S&P 500 was up 18.26 points, or 0.75 percent, at 2,437.64.
The Nasdaq Composite was up 54.76 points, or 0.89 percent, at 6,201.38.
With investors awaiting second-quarter corporate earnings, equity valuations have come under focus at a time when inflation remains low, recent economic data has been tepid and President Donald Trump’s pro-growth policies face delays. The S&P 500 is trading at nearly 18 times forward earnings estimates, well above its long-term average of 15 times.
“Valuations are certainly a little bit elevated and they are a bit of a concern,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“We saw valuations run up in the first quarter but then when earnings came out they were pretty solid so ultimately if earnings continue at the rate we’ve seen recently, then those valuations will be fine.”
Federal Reserve Chair Janet Yellen said on Tuesday that by standard metrics, some asset valuations look high while Vice Chair Stanley Fischer warned that central bank must remain vigilant in monitoring financial stability risks.
San Francisco Fed head John Williams said investors may be getting overly complacent about risks and that “the stock market seems to be running pretty much on fumes.”
Meanwhile, Trump administration’s ability to deliver on election promises came under focus on Tuesday after a planned vote on Republican healthcare bill to dismantle the Affordable Care Act was put off to after the Senate’s July 4 recess.
The healthcare legislation is the first plank of President Trump’s domestic policy agenda, with investors eager for him to move onto his other plans, including tax cuts and infrastructure spending.
Oil prices rose about 1 percent but concerns remained that a three-year supply glut is far from over.
KB Home was up 3.2 percent at $23.54 after the homebuilder increased its full-year forecast.
General Mills rose 2.3 percent to $56.81 after the Cheerios maker’s quarterly profit beat estimates.
Advancing issues outnumbered decliners on the NYSE by 2,263 to 516. On the Nasdaq, 2,016 issues. (Reporting by Tanya Agrawal; Editing by Arun Koyyur)