US stocks RALLY on Deutsche Bank deal

NEW YORK – US stocks rose strongly on Friday (Sep 30) as financial shares surged on news that Deutsche Bank was near a settlement with US regulators over its sale of toxic mortgage bonds before the financial crisis.

US-traded shares of Deutsche Bank surged 14.0 per cent on news that it is near a deal to pay US$5.4 billion to resolve the matter, a person familiar with the matter told AFP.

That is much smaller than the US$14 billion figure US officials initially targeted that had raised worries about Deutsche Bank’s capital position.

The news bolstered shares of US banks especially, after the German’s bank’s troubles had threatened to spill over into the financial system more broadly. Citgroup and Bank of America both won more than three per cent.

The Dow Jones Industrial Average rose 164.70 points (0.91 per cent) to 18,308.15.

The broad-based S&P 500 jumped 17.14 points (0.80 per cent) to 2,168.27, while the tech-rich Nasdaq Composite Index advanced 42.85 points (0.81 per cent) to 5,312.00.

Dow members ExxonMobil and Chevron rose 1.0 per cent and 1.6 per cent respectively as US oil prices advanced following Wednesday’s agreement of major oil producers to cut output.

Big-box store Costco Wholesale jumped 3.4 per cent as it reported that fourth-quarter earnings edged up two per cent to US$779 million behind a two per cent gain in sales to US$35.7 billion.

Costco’s rivals in retail also climbed, with Wal-Mart Stores gaining 2.0 per cent and Target 1.4 per cent.

Spice company McCormick climbed 2.6 per cent after reporting a 31 per cent rise in third-quarter profit to US$131.1 million and characterising consumer demand as strong.
– AFP/ec