S&P, Dow hit new peaks in JPMorgan-spurred rally

By Yashaswini Swamynathan and Tanya Agrawal

REUTERS - The S&P 500 and the Dow scaled new highs on Thursday as JPMorgan's strong results set an upbeat mood for earnings and spurred a rally in financial stocks.

While the Bank of England unexpectedly left interest rates unchanged, investors saw hope after the central bank signaled there would be a stimulus program in August, once the impact of Britain's vote to leave the European Union had been assessed.

JPMorgan, the biggest U.S. bank by assets, reported quarterly revenue rise that beat estimates by a hefty margin. The bank's shares rose 2.6 percent, while the S&P financial index's 1.1 percent gain led the gainers among the 10 major S&P sectors.

"We saw a significant beat from JPMorgan and that's helping the psychology of the market," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"With the weaker dollar helping commodities and better-than-expected economic data, the market is taking the path of least resistance with an upward bias."

At 10:52 a.m. ET (1452 GMT) the Dow Jones industrial average was up 132.37 points, or 0.72 percent, at 18,504.49.

The S&P 500 was up 12.22 points, or 0.57 percent, at 2,164.65.

The Nasdaq Composite was up 31.58 points, or 0.63 percent, at 5,037.31.

Wall Street's record-breaking rally extended to the fourth day this week and Hogan said the market needs to see earnings growth to sustain the rally.

KFC owner Yum Brands rose 3.4 percent to $88.66 after its key China business showed signs of strength.

Delta's 2.8 percent gain after its higher-than-expected quarterly profit, and also sent other airline stock higher.

Citigroup and Wells Fargo are scheduled to report results on Friday. As the earnings season gathers steam, investors will parse reports to justify stock valuations.

Earnings at S&P 500 earnings are expected to have fallen 5 percent in the second quarter, mirroring the first. But, analysts expect steady growth through the rest of the year, according to StarMine.

Stocks still look expensive with the S&P 500 trading near 17.3 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.

Japanese messaging app operator Line Corp soared as much as 36 percent in their debut, benefiting from the market rally.

Strong economic data released earlier on Thursday also helped the markets hum along with weekly jobless claims holding at lower levels and producer prices recording their biggest gain in a year in June.

Traders say if economic data continues to point to momentum in the economy, the Federal Reserve could raise rates later in the year.

Advancing issues outnumbered decliners on the NYSE by 1,997 to 832. On the Nasdaq, 1,795 issues rose and 817 fell.

The S&P 500 index showed 64 new 52-week highs and no new lows, while the Nasdaq recorded 107 new highs and 12 new lows.

(Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)