CORRECTED: Wall St up on economy bets; banks, tech lead

10/03/2010 - 22:29

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(Corrects second paragraph to show bank index is at highest in 16 months, not two years)

By Rodrigo Campos

NEW YORK (Reuters) - Bank and technology shares lifted Wall Street on Wednesday on hopes a revival in business demand will boost corporate profits.

Banks' shares rallied to their highest in 16 months, adding to recent momentum, amid bets an improving economy will stoke loan demand.

"The natural conclusion investors are making is, if the economy is turning, financials are poised to do well," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus in Baltimore.

The Nasdaq rallied for a fifth straight day, helped by data showing U.S. wholesale inventories fell unexpectedly in January and sales hit their highest in more than a year.

"There's demand out there and (businesses) are going to have to build up those inventories," Mata said.

Chip maker Intel Corp shares gained 1.2 percent to $21.19 and the PHLX semiconductor index <.SOXX> rose 2.2 percent.

Industrial shares ranked among the top gainers, with Boeing Co up 3.3 percent at $70.01.

The Dow Jones industrial average <.DJI> edged up 2.95 points, or 0.03 percent, to end at 10,567.33. The Standard & Poor's 500 Index <.SPX> rose 5.16 points, or 0.45 percent, to 1,145.61. The Nasdaq Composite Index <.IXIC> gained 18.27 points, or 0.78 percent, to 2,358.95.

The benchmark S&P 500 Index extended its year-long advance and is now up 69.3 percent from its 12-year closing low hit a year ago on March 9.

The more upbeat view of the economy helped lift bank stocks, with Citigroup Inc up 3.7 percent at $3.96, and Wells Fargo & Co up 2 percent at $29.57. The KBW bank index <.BKX> rose 2.2 percent to its highest close since mid- November 2008.

In deal news, Abbott Laboratories agreed to buy Facet Biotech Corp for $27 a share late Tuesday, topping a failed bid from Biogen Idec Inc .

Abbott's stock rose 0.4 percent to $55.03 on the New York Stock Exchange, while Facet soared 66.6 percent to $27.01 on the Nasdaq.

Shares of Travelers Co dropped 1.3 percent to $52.89, capping the Dow industrials' advance.

About 9.50 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, more than eight stocks rose for every five that fell.

(Reporting by Rodrigo Campos; Editing by Jan Paschal)