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Big Banks: Financial Winners on a Really Weird Day

Nasdaq at 4:00 p.m. ET hadn't yet provided any explanation of what caused the trading and quote reporting problems. Nasdaq's own shares were down over 3% to close at $30.46.

The Dow Jones Industrial Average (^DJI) rose 0.5% while the S&P 500 (SPX.X) was up 0.9%, and the Nasdaq Composite (^IXIC) ended with a gain of 1.1%.

The HSBC Flash China Manufacturing Purchasing Managers' Index showed an increase during August to 50.1 from 47.7 in July. A reading above 50 indicates expansion, and investors cheered the highest manufacturing PMI for China in four months. HSBC said "Businesses reported that output and new orders had started to rise, and the backlog of work increased. There was also a rise in the purchases of raw materials. However, new export orders fell at a faster rate and employment dropped, though at a slower rate. Output and supply prices both increased."

The news pushed shares of Peabody Energy (BTU) up over 6% to close at $17.62, while Cliffs Natural Resources (CLF) was up 6% to close at $22.45, and Freeport-McMoRan Copper & Gold (FCX) rose over 3% to close at $31.35.

The story of economic strengthening outside the United States was bolstered by the Markit Eurozone PMI Composite Output Index, which showed the largest monthly increase in business activity for over two years in August, according to a flash estimate. The PMI rose for the fifth consecutive month to 51.7, from 50.5 in July, moving to its highest level since June 2011.

With Federal Reserve hysteria likely out of the headlines until after Labor Day, the KBW Bank Index (I:BKX) rose 1.5% to close at 65.04, with all 24 index components showing gains. The worst performer among the index components was Wells Fargo (WFC - Get Report), which was up only slightly to close at $42.48, after Reuters on Wednesday reported the nation's leading mortgage lender would lay off 2,200 employees because of a decline in mortgage loan refinancing applications.

Stocks had taken a beating Wednesday following the release of minutes from the most recent meeting of the Federal Open Market Committee on July 30 and 31.

The short-term Federal Reserve concern for investors is the expected tapering of the central bank's monthly purchases of $40 billion in long-term agency mortgage-backed securities and $45 billion in long-term U.S. Treasury bonds, which has been going on since last September. The market has looked ahead to the expected rise in long-term interest rates that will be brought about by a limiting of Fed expansion, by pushing the market yield on 10-year Treasury bonds to 2.91% from 1.70% at the end of April.
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