Most US stocks rose yesterday ahead of Goldman Sachs Group's surprise report of an increase in first quarter profit, but the spectre of bankruptcy for General Motors kept the Dow Jones industrial average in the red.
Mr McIntyre said the Dow was also weighed down by Boeing's disappointing outlook, a fall back in oil prices and worries about the fate of General Motors.
However, the Standard & Poor's 500 and the technology-rich Nasdaq managed to rise.
Banking sector optimism followed surprisingly upbeat preliminary quarterly results last week from Wells Fargo.
After the bell, Goldman Sachs surprised investors by posting its quarterly results a day early, and announced a $US5 billion ($NZ8.5 billion) public offering of common equity. Goldman's stock ended the regular session up nearly 5% at $US130.15.
Shares of JPMorgan, due to post results tomorrow, rose almost 3% to $US33.70, while Bank of America gained 15.4% to $US11.02. Citigroup, whose results are expected on Friday, soared 25% to $US3.80. The KBW Bank index climbed 8%.
"The market is cheering, not so much that the banks are on the mend, but that they are not going to die," said Les Satlow, portfolio manager of Cabot Money Management in Salem, Massachusetts.
"These are banks that are clawing their way back, literally from the brink of extinction. My view is that a key crisis phase of this economic downturn is behind us."
The banking sector's health had been a major worry after fallout from the financial crisis led the US government to pump billions of dollars into troubled institutions such as Citigroup, which gave Wall Street a surprise last month when it said it was profitable in January and February.
That optimism has fuelled a month-long recovery of the stock market from 12-year lows hit in early March.
Since setting a bear market closing low on March 9, the S&P 500 has risen 27%.
Mr McIntyre said some of the optimism in the market had come from people trying to recover the short positions they had taken in the market, betting against the financial sector showing a recovery in the current reporting season.
"With the results coming out stronger than expected, buyers are coming into the market to `cover their shorts'."
One of the reasons for the better performance by banks was the change in the mark-to-market rules in the US whereby banks did not have to value their assets at current value as though they would sell them today, he said.
"Six to eight months ago, the US banks had a clean-out of chief executive officers. The new CEOs had written down assets aggressively, as they didn't want to have another round of toxic assets on their balance sheets.
"You wouldn't have to be a rocket scientist to know that the next time the banks reported they would be reporting on the upside."
China's economy had also posted better-than-expected growth, which had helped market optimism, Mr McIntyre said.
Market trading was mixed around the world yesterday, with New Zealand, Australia and Hong Kong sharemarkets rising and Japan, Korea and Singapore all down.
In Australia, banking stocks rose on the back of Wall St's rise.
Investors moved out of defensive stocks, such as supermarkets and health care companies, and into riskier stocks such as banks.
In New Zealand, companies that had been discounted by investors - Fletcher Building and The Warehouse - were back in favour, he said.
At a glance
• US reporting season starts on positive tone.
• Banking sector stocks back in favour.
• Month-long recovery in sharemarkets continues.
• Worries remain over fate of General Motors.
