NEW YORK — A turn of heart by a usually downbeat analyst yanked the stock market from its slumber Monday.
Soaring financial shares propelled indexes to their biggest one-day gain in six weeks after influential banking analyst Meredith Whitney raised her rating on Goldman Sachs Group, which reports earnings today. Whitney also said on CNBC that Bank of America looks inexpensive given the assets on its books.
Her more upbeat tone helped lift the Dow Jones industrial average 185 points on relatively thin trading volume. It was the best performance for the blue chips since June 1 and followed a month of often directionless trading in which investors looked for any fresh sign that the economy was improving, not simply licking its wounds.
Traders saw the hopeful outlook on banks as a sign other industries could be in better shape than analysts expected.
Hundreds of earnings reports from the April-June quarter are due this week. By the end of last week, major stock indicators had fallen 7 percent since mid- June as investors found little reason to push stocks higher and worried that the rally had been overdone.
“The market basically took a big pause,” said David Kelly, chief market strategist at JPMorgan Funds.
He said stocks had drifted too far and were due for a bounce: “Any sign that a normal economy might get re-established should push the market higher.”
Investors latched on to Whitney’s comments because she has for years offered one of the more pessimistic — and accurate — assessments of the banking business.
The Dow rose 185.16, 2.3 percent, to 8,331.68. The Standard & Poor’s 500 index jumped 21.92, 2.5 percent, to 901.05, its first finish over the 900 mark since July 1. It was the S&P’s best day since June 1.
The Nasdaq composite rose 37.18, 2.1 percent, to 1,793.21 and also posted its best performance since the start of June.
Goldman has long been considered the strongest bank in the recession, but Bank of America has been one of the hardest hit by loan losses. Any improvement in banks’ profits could shore up their financial position and free up money for lending.
BofA, JPMorgan Chase and Citigroup also are scheduled to report second-quarter results this week. Banks have taken some of the recession’s biggest blows as investment and loan losses mounted.
“There is a contingency of traders out there that believe the market can’t recover without financials,” said Randy Fred erick, director of trading and derivatives at Charles Schwab.
