Financial stocks higher on Twist talk, housing
SAN FRANCISCO (MarketWatch) -- Financial stocks surged Wednesday on indications the Federal Reserve may extend its Operation Twist this summer and positive signs in the housing sector.
On Wednesday, Dennis Lockhart, the president of the Atlanta Federal Reserve Bank said extending the Fed's Operation Twist remains an option on the table this summer given gathering risks to the U.S. economy from Europe. Read more on Lockhart.
Worries of an economic downturn, however, didn't seem to apply to home builders. The sector, which moves in tandem with banks, surged Wednesday after
Out of Europe, the European Central Bank kept interest rates at 1% and pressured leaders to address the region's growing debt crisis. Read more on ECB.
Meanwhile, European Commission President Jose Manuel Barroso said the region is moving closer to a "banking union" given recent proposals advanced to deal with failed banks. Read more on Barroso comments.
Earlier in the day, CNBC's Kate Kelly said on the air that Morgan Stanley has had discussions with Blackstone Group (BX) on the matter.
That report, however, was later shot down by a person familiar with the situation, who said the firm had been approached by several private equity firms but had no interest selling a stake in the unit, according to DowJones Newswires. Read more on Morgan Stanley.
A Morgan Stanley spokesperson declined to comment on either report.
Elsewhere in the financial sector, insurers performed well as
Collectively the financial stocks in the S&P 500 Index (SPX) , as tracked by the Financial Select Sector SPDR ETF (XLF) , added 2.9%. The KBW Bank Index (BKX) , which tracks the leading 24 U.S. banks, rose 3%.
Bank regulators told Congress Wednesday they are reviewing their oversight of J.P. Morgan in light of its recent multi-billion dollar trading loss on derivatives contracts. Read more on J.P. Morgan.