NEW YORK, NY - AUGUST 26: People take photos at the Wall Street Bull near the New York Stock Exchange (NYSE) on August 26, 2016 in New York City. Stocks fell on Friday after news that the U.S. economy grew at the sluggish rate of 1.1 percent. Despite the slowing growth rate Fed Chair Janet Yellen voiced optimism about the economy at the central bank's annual Jackson Hole summit. Spencer Platt/Getty Images/AFP == FOR NEWSPAPERS, INTERNET, TELCOS & TELEVISION USE ONLY ==
NEW YORK: Wall Street snapped a three-day losing streak on Monday as financial stocks rose after Federal Reserve Chair Janet Yellen said the case for an interest rate hike had strengthened.
Yellen, addressing a gathering of global central bankers on Friday, said the central bank was close to meeting its goals of maximum employment and stable prices, while describing consumer spending as “solid”.
Yellen gave little indication of when the Fed would move but vice chairman Stanley Fischer suggested that a move as soon as next month could be possible.
Financial stocks, which stand to gain the most in a higher interest rate environment, rose as traders raised bets on a hike in the coming months.
The S&P 500 financial index was trading at its highest level since Dec 17, a day after the US central bank raised interest rates for the first time in nearly a decade.
Gains in the sector outperformed the other nine major S&P 500 indexes that were also trading higher.
Wells Fargo rose 2.5% and provided the biggest boost to the S&P, while JPMorgan and Bank of America rose about 1.1%.
Goldman Sachs’ 1.1% gain made it the top influence and the biggest gainer on the Dow.
At 12:41pm ET, the Dow Jones industrial average was up 107.11 points, or 0.58%, at 18,502.51.
The S&P 500 was up 12.28 points, or 0.57%, at 2,181.32.
The Nasdaq Composite was up 20.80 points, or 0.4%, at 5,239.72.
“I think the market’s getting more comfortable with the idea that the Fed is going to raise rates this year,” said Chris Zacarrelli, chief investment officer at Cornerstone Financial Partners.
“The Fed is walking on a tightrope, by talking about a rate hike, but not necessarily spooking the markets.”
Supporting the case for higher rates was a report that showed consumer spending, which accounts for more than two-thirds of US economic activity, rose for the fourth straight month in July.
However, in the 12 months through July, the core personal consumption expenditure, the Fed’s preferred inflation measure, increased 1.6%, below its 2% target.
The dollar index rose 0.11%, trading at more than a two-week high, while oil prices slipped more than 1.5%.
Herbalife rose 2% after Carl Icahn bought 2.3 million shares in the nutritional supplements maker after denying reports of attempts to sell his stake.
Micron Tech rose 2.9% and was among the top percentage gainers on the S&P after Deutsche Bank and Stifel raised price targets.
Advancing issues outnumbered decliners on the NYSE by 2,183 to 709. On the Nasdaq, 1,777 issues rose and 964 fell.
The S&P 500 index showed 20 new 52-week highs and two new lows, while the Nasdaq recorded 96 new highs and 13 new lows. - Reuters
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