The U.S. markets are up solidly higher on Tuesday as rising interest rates are giving bank stocks a lift.
By Paolo Palazzi-Xirinachs
Tuesday, May 24, 2016
Investors are also buying big-name technology companies. And earlier in the day, European indexes also climbed. Near midday in New York City, the Dow Jones Industrial was up 1.23% and the S&P 500 up 1.32 percent. Meanwhile, the Nasdaq composite index also gained 1.77 percent.
U.S. stocks joined a rally in European shares as growing conviction that the Federal Reserve will raise interest rates this summer sparked gains in financial shares. The dollar rose and Treasuries fell as housing data reinforced confidence in the strength of the American economy.
Financial and technology companies have set the S&P 500 Index on track for its biggest gain in two weeks, while the Stoxx Europe 600 Index posted its best day since mid-April. The dollar strengthened to its strongest level since March against the euro, denting demand for gold, which is headed for its longest losing streak since November. Sterling was boosted by a poll showing the campaign to keep Britain in the European Union is gaining strength. Euro-area finance ministers convened in Brussels today, primarily to discuss the disbursement of a proposed 11 billion euros in aid for Greece, but also for talks on how to ease its 321 billion euros of debt through lengthening loan maturities, lowering interest rates and postponing payments.
The yield on the 10-year U.S. Treasury note rose to 1.86% from 1.84%. When interest rates go up, as they have been recently, banks can make more money from lending, which is a major reason shares of JPMorgan Chase climbed 1.7% and Bank of America stock rose 1.4%. Tech stocks also rose. Apple shares picked up 1.2 percent and shares of Alphabet, Google’s parent company, added 1.3 percent. Microsoft stock rose 1.7 percent.
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