S&P 500 closes higher, banks rally

The S&P 500 banking index added 1.2% in its first three-day winning streak in more than three weeks

The U.S. S&P 500 closed higher on Wednesday, with Morgan Stanley and Bank of America rallying after solid quarterly results, while investors remained focused on the recent increase in China-U.S. trade tensions.

Morgan Stanley’s shares climbed 4.7% to a record high, while Bank of America gained 4.4% after the lenders beat U.S. stock market estimates for third-quarter profit on dealmaking strength.

The S&P 500 banking index added 1.2% in its first three-day winning streak in more than three weeks.

A day earlier, Goldman Sachs and JPMorgan Chase reported solid performance in investment banking and predicted that the business would continue to boom.

This week’s bank results indicate strength for U.S. companies as third-quarter earnings season kicks off, and they also provide hints of the economy’s health while many macroeconomic reports remain on hold due to a government shutdown.

People are spending, and the consumer seems to be fine. That’s been one of the messages from the bank earnings, said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta. Employment is not falling like a stone. Both inflation and employment are within ranges that are basically reasonable.

The Philadelphia Semiconductor Index jumped 3% after ASML reported third-quarter orders and operating income above market expectations, lifted by booming AI investment. ASML’s U.S. stock rallied 2.7%.

The S&P 500 jumped 0.40% to close the session at 6,671.06 points.

The Nasdaq added 0.66% to 22,670.08 points, while the Dow Jones Industrial Average shed 0.04% to 46,253.31 points.

Seven of the 11 S&P 500 sector indexes rose, led by real estate, up 1.5%, followed by a 1.29% gain in utilities.