Gains for bank stocks help lead major US indexes highe

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FILE – In this Nov. 23, 2020 file photo, a street sign is displayed at the New York Stock Exchange in New York. Stocks are off to a mostly higher start on Wall Street, keeping several indexes near record highs, but weakness in some Big Tech shares kept the gains in check (AP Photo/Seth Wenig, File)

Stocks closed broadly higher on Wall Street after shaking off a wobbly start. Banks helped lead the gains as bond yields rose, which will allow banks to charge higher rates on mortgages and other loans. The S&P 500 added 1.1% Wednesday and the Dow Jones Industrial Average rose 1.4% to another all-time high. Small-company stocks continued to outpace the rest of the market, as they have done since the beginning of the year. The yield on the 10-year Treasury note rose to its highest level in over a year. GameStop doubled suddenly in another burst of volatile trading.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks shook off a weak start and moved broadly higher in afternoon trading on Wall Street, led by gains in technology and financial companies.

Bank stocks benefited from another upward move in long-term interest rates in the bond market, which will allow them to charge higher rates on mortgages and other loans, increasing their profits. JPMorgan Chase rose 2% and Bank of America added 2.8%.

Boeing surged 7.6%, the biggest gainer in the Dow Jones Industrial Average, after shedding 2.5% over the prior two days in the wake of an engine malfunction over the weekend in a 777 aircraft operated by United Airlines.

The plane, which took off from Denver and was bound for Honolulu, was forced to make an emergency landing Saturday after a fan blade broke and pieces of the engine’s casing fell on neighborhoods. Federal aviation regulators ordered the grounding of planes with the type of engine on the plane.

The S&P 500 index was up 1.1% as of 2:30 p.m. Eastern, after being down as much as 0.6% earlier. The Dow Jones Industrial Average rose 440 points, or 1.4% to 31,977 and the technology-heavy Nasdaq Composite was up 0.7%.

The Russell 2000, which tracks smaller companies, continued to outpace the rest of the market, as it has since the beginning of the year. That’s a sign investors are feeling more confident about economic growth. The index rose 2%.

Treasury yields continued to climb, adding to a multi-week increase in rates that are used as benchmarks for many kinds of loans including corporate debt and 30-year mortgages. The yield on the 10-year Treasury note rose to 1.38%, the highest level in just over a year.

The rise in bond yields has several implications for both the stock market and overall economy. Higher yields make stocks with lofty valuations less attractive. Those tend to be technology companies, which are priced typically for growth and not for a steady return of dividends like mature companies like makers of consumer staples, utilities and real estate.

The S&P 500’s technology sector accounted for a big share of the rally after declining for six straight days. But some Big Tech companies fell.

Apple fell 1.2% and Amazon dropped 1.4%. Those and other Big Tech companies rocketed in 2020 as investors bet that the pandemic would cause Americans to shift shopping habits and buy gadgets to keep themselves occupied in pandemic quarantines.

The bond market could also be a harbinger for inflation, something that has been nonexistent in the U.S. for the better part of a decade.

Federal Reserve Chair Jerome Powell told Congress on Wednesday that the central bank will not begin raising interest rates until it believes it has reached its goals on maximum employment and inflation.

As he did before the Senate Banking Committee on Tuesday, Powell told the House Financial Services Committee that the Fed was in no hurry to raise benchmark short-term interest rates or to begin trimming its $120 billion in monthly bond purchases used to put downward pressure on longer-term rates.

Powell said the Fed did not see any indication that inflation could race out of control. While price increases might accelerate in coming months, Powell said those increases were expected to be temporary and not a sign of long-run inflation threats.

Investors are still anticipating another round of stimulus to help boost the economy. The U.S. House of Representatives is likely to vote on President Biden’s proposed stimulus package by the end of the week. It would include $1,400 checks to most Americans.

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