Banks Lead Gains on Wall Street 08/29 17:08
Banks led the stock market higher Monday as investors anticipate that the
Federal Reserve could raise interest rates this year from their historically
low levels. That could help banks recover from a long slump by making lending
NEW YORK (AP) -- Banks led the stock market higher Monday as investors
anticipate that the Federal Reserve could raise interest rates this year from
their historically low levels. That could help banks recover from a long slump
by making lending more profitable.
The Dow Jones industrial average rose 107.59 points, or 0.6 percent, to
18,502.99. The Standard & Poor's 500 index climbed 11.34 points, or 0.5
percent, to 2,180.38. The Nasdaq composite edged up 13.41 points, or 0.3
percent, to 5,232.33.
Major U.S. banks posted solid gains as traders bet that the Fed was likely
to nudge interest rates higher in December or even at its next policy meeting
in September. Federal Reserve Chair Janet Yellen told a conference last week
that the case for raising rates was strengthening given improvements in the
Raising interest rates from their rock-bottom levels, where they have been
since the 2008 financial crisis, could be a good thing not only for markets but
for savers, said Rob Lutts, chief investment officer of Cabot Wealth Management
in Salem, Mass.
"We're running out of excuses not to raise interest rates," Lutts said.
"We're the wealthiest economy on the planet, and everybody who has a bank
account is earning virtually zero on those balances today. There's a lot of
spending power that may be released in the economy" if savers earn more on
their bank accounts, Lutts said.
Wells Fargo, the nation's largest mortgage lender, rose $1.05, or 2.2
percent, to $49.56 and JPMorgan Chase gained 73 cents, or 1.1 percent, to
$66.95. Banks are still one of the worst-performing sectors in the market this
year. The financial sector of the S&P 500 has gained just 1.8 percent in 2016
versus a 6.7 percent increase for the broader index.
Herbalife added $2.80, or 4.6 percent, to $63.30 after Icahn said late
Friday he had bought an additional 2.3 million shares in the supplements and
weight-loss products company, and that he never gave an order to sell his $1
billion stake. A Wall Street Journal report earlier Friday said that the
investment bank Jefferies had been looking for buyers for Icahn's position.
Overseas, France's CAC 40 lost 0.4 percent and Germany's DAX fell 0.4
percent. The London Stock Exchange was closed for a summer bank holiday.
Earlier in Asia, Japan's benchmark Nikkei 225 added 2.3 percent South Korea's
Kospi fell 0.3 percent. Hong Kong's Hang Seng slipped 0.4 percent.
Benchmark U.S. crude oil fell 66 cents to $46.98 a barrel. Brent crude, used
to price oil internationally, lost 66 cents to $49.26 a barrel. In other energy
trading, wholesale gasoline fell 5 cents to $1.47 a gallon, heating oil fell 1
cent to $1.49 a gallon and natural gas fell 2 cents to $2.85 per 1,000 cubic
Trading was subdued ahead of the Labor Day holiday weekend in the U.S. Very
few companies are reporting earnings this week and there is scant news on the
economy, apart from the Labor Department's monthly job survey coming up on
U.S. government bond prices rose. The yield on the 10-year Treasury note
fell to 1.56 percent from 1.63 percent. The dollar rose to 101.98 yen from
101.86 yen late Friday. The euro rose to $1.1187 from $1.1183.
Precious and industrial metals futures closed mostly higher. Gold edged up
$1.20 to $1,327.10 an ounce, silver gained 11 cents to $18.86 an ounce and
copper edged down less than a penny to $2.08 a pound.