US STOCKS-Wall St gains with economic hopes; bank stocks jump

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* Banks stocks surge, led by JPMorgan Chase
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By Caroline Valetkevitch
May 27 (Reuters) - U.S. stocks rose on Wednesday, with the
S&P 500 closing above 3,000 for the first time since March 5, as
the further easing of lockdowns lifted optimism for an economic
recovery.
Bank stocks powered the day's advance, with the S&P 500
financial index .SPSY leading gains among S&P 500 sectors.
Shares of JPMorgan Chase & Co JPM.N jumped for a second
day and led the gains in the financial index. The bank's chief
executive, Jamie Dimon, said Tuesday he expects JPMorgan will
boost its credit reserves again in the second quarter, but said
there are signs the economy is regaining its footing.
Continued easing of lockdowns, optimism about an eventual
COVID-19 vaccine and massive U.S. stimulus have been driving the
market's recent gains.
"It's all about liquidity and the hopes that the economy
will eventually do well," said Peter Cardillo, chief market
economist at Spartan Capital Securities in New York.
"The rally will continue, but I don't think it will continue
without pullbacks," he said, noting that weak second-quarter
earnings could give investors a "reality check."
Tech-related shares underperformed the broader market on
Wednesday after leading the recent rally.
Unofficially, the Dow Jones Industrial Average .DJI rose
553.16 points, or 2.21%, to 25,548.27, the S&P 500 .SPX gained
44.36 points, or 1.48%, to 3,036.13 and the Nasdaq Composite
.IXIC added 72.14 points, or 0.77%, to 9,412.36.
But amid the recent gains, U.S. tensions with China have
cast a cloud on markets.
President Donald Trump said Tuesday that Washington would
announce its response to China's planned national security
legislation on Hong Kong before the end of the week. U.S.
Secretary of State Mike Pompeo said Wednesday that Hong Kong no
longer warrants special treatment under U.S. law as it did when
it was under British rule, potentially a big blow to its status
as a major financial hub. Tech stock are among the most sensitive to Chinese growth,
said Sameer Samana, senior global market strategist at Wells
Fargo Investment Institute in St. Louis.
"If the market is going to go higher from here, you're going
to have to have broader participation, but you are going to need
those large-cap tech companies to be along for the ride, because
they make up such a large portion of the benchmark," Samana
said.
Also on Wednesday, a Federal Reserve report showed that U.S.
businesses continued to be hammered by the effects of the novel
coronavirus epidemic into the middle of May.