Hopes that banks would start raising their dividends sent stocks sharply higher yesterday. Indexes closed at their highest levels in more than two years after a successful bond auction in Portugal eased worries about Europe's debt crisis.
Portugal borrowed $1.6 billion at a lower long-term interest rate than many expected. Investors have been concerned that Portugal will struggle with its debts and become the third European country to require a bailout after Greece and Ireland.
Analysts cautioned that it's still possible Portugal could need a financial lifeline if its economy slips back into recession this year.
Banks led the market higher after a Wells Fargo Securities analyst issued a report saying its earnings should grow much faster than other firms this year and that banks were likely to distribute more of their earnings to shareholders as dividends.
JPMorgan Chase & Co. rose 2.5 percent to $44.71 after company CEO Jamie Dimon told CNBC late Tuesday that the bank hopes to raise its dividend in the second quarter. JPMorgan's stock led the 30 large companies that make up the Dow Jones industrial average, followed closely by Bank of America. Bank of America gained 2 percent to $14.99.
The Dow rose 83.56 points, or 0.7 percent, to close at 11,755.44. That's the Dow's highest close since Aug. 11, 2008. The Standard & Poor's 500 index also reached its highest level since Aug. 28, 2008. The index gained 11.48, or 0.9 percent, to 1,285.96. The Nasdaq composite rose 20.50, or 0.8 percent, to 2,737.33. - AP