Banks lead Wall Street to highs, helped by data, Powell comments

By Lewis Krauskopf

(Reuters) - Wall Street hit record highs on Tuesday led by bank stocks, as investors seized on strong consumer confidence data and comments from President Donald Trump's nominee to lead the Federal Reserve.

But major indexes briefly pulled back from session highs after news that North Korea had fired a missile.

Jerome Powell, nominated to replace Janet Yellen as Fed chair, defended the need to potentially lighten regulation on the financial sector in testimony before a Senate committee.

Powell overall presented himself as an extension of the Fed policies set under Yellen and her predecessor Ben Bernanke, confirming market expectations that he offered stability despite the change in Fed leadership.

 

Data showed that U.S consumer confidence surged to a near 17-year high in November, driven by a robust labour market, while house prices rose sharply in September in the latest encouraging reports about the U.S. economy.

"Some of the data that we got today kind of confirms this goldilocks environment that we have," said Anthony Saglimbene, global market strategist at Ameriprise in Troy, Michigan.

"Unemployment and interest rates are low, confidence and asset prices are high."

The Dow Jones Industrial Average <.DJI> rose 188.14 points, or 0.8 percent, to 23,768.92, the S&P 500 <.SPX> gained 21 points, or 0.81 percent, to 2,622.42 and the Nasdaq Composite <.IXIC> added 25.08 points, or 0.36 percent, to 6,903.60.

Financials <.SPSY> were the best-performing sector, rising 1.8 percent, and were on pace for their biggest daily gains in more than five months.

JP Morgan rose 3.1 percent and Bank of America gained 3.2 percent.

"When you look at the financials as a group, they probably have a couple of tailwinds - in terms of how he (Powell) thinks about regulation and interest rates and certainly the progress being made so far on tax reform," said Art Hogan, chief market strategist at B. Riley FBR in Boston.

Wall Street is closely watching progress on the Republicans' tax-reform efforts, with hopes that corporate tax cuts will further fuel the record-setting rally for equities.

Trump's push for tax cuts hit new turbulence, however, with Democrats abruptly pulling out of a planned White House meeting with him after he sent a tweet attacking them, while some Senate Republicans were demanding changes to the tax bill.

North Korea fired a ballistic missile, two U.S. government sources said, a week after Trump put North Korea back on a U.S. list of countries that it says support terrorism.

Investors have pointed to geopolitical concerns, particularly involving North Korea, as a potential catalyst for a significant market selloff.

In corporate news, Buffalo Wild Wings shares rose 6.3 percent after Roark Capital Group said it would buy the chicken wing restaurant chain.

Advancing issues outnumbered declining ones on the NYSE by a 1.51-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favoured advancers.

(Additional eporting by Sruthi Shankar and Rama Venkat Raman in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski)