Financial companies led stocks broadly higher on Wall Street Thursday as traders welcomed news that the Federal Reserve and other regulators are removing some limits on the ability of banks to make investments.
The S&P 500 climbed 1.1% following a jumpy day of trading. At one point, the index was down 0.9% before the rally strengthened toward the end of the day. The gains reversed some of the S&P 500’s losses from a day earlier, when the market had its biggest drop in nearly two weeks.
Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry.
“It is potentially quite meaningful for the banks,” said Tony Roth, chief investment officer at Wilmington Trust.
Technology and health care stocks also helped lift the market, outweighing losses in utilities. Bond yields fell, a sign of caution in the market.