Bank stocks are climbing Monday morning as bond yields continue to rise. Bond yields are climbing to their highest levels this year, which points to higher interest rates and bigger profits for banks from lending money. Investors have been selling bonds, pushing yields higher, as they expect the spending plans of president-elect Donald Trump to lead to higher inflation.
The big moves for financial firms are pulling the broader stock market higher. Investors are selling companies that pay big dividends like utilities and phone companies as bonds become more appealing to investors seeking income. The dollar is also rising.
KEEPING SCORE: The Dow Jones industrial average rose 79 points, or 0.4 percent, to 18,926 as of 10:20 a.m. Eastern time. The Standard & Poor’s 500 index picked up 6 points, or 0.3 percent, to 2,170. The Nasdaq composite added 3 points, or 0.1 percent, to 5,240.
BANK BONANZA: Bank stocks continued to surge. They’re rising in part because of the big jump in bond yields since the election. Investors are also pleased at the prospect of looser regulation and bigger profits. Trump’s election could result in big changes to the Dodd-Frank financial reform bill or to the Consumer Financial Protection Bureau. Bank of America rose 98 cents, or 5.1 percent, to $20 and JPMorgan Chase picked up $2.96 percent, or 3.9 percent, to $79.65.
DOING DEALS: South Korean conglomerate Samsung said it will buy Harman International for $8 billion, or $112 a share. Harman makes products for connected cars including audio systems and safety and entertainment features. Its stock jumped $22.08, or 25.2 percent, to $109.73.
MENTORING: German industrial equipment company Siemens agreed to buy software maker Mentor Graphics for $4.5 billion, or $37.25 a share. Mentor’s stock rose $5.67, or 18.5 percent, to $36.35.
DIG IT: Shares of communication adapter maker Digi International rose $1.83, or 14.8 percent, to $13.38 after the company said it received an offer from Belden, a communications equipment company. Digi said it rejected the bid of $13.82 a share, or about $359 million, because it’s too low. Belden stock added $1.88, or 2.7 percent, to $71.58.
BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.25 percent. Bond trading was closed Friday for the U.S. Veterans’ Day holiday. The 10-year yield, which is a benchmark for interest rates on home mortgages and other kinds of loans, finished at 2.06 percent on Thursday. The day before the Nov. 8 presidential election the yield was 1.83 percent.
CURRENCIES: The dollar rose sharply against other currencies as U.S. interest rates rose. It jumped to 108.41 Japanese yen from 106.78 yen. The euro fell to $1.0714 from $1.0845.
LAGGARDS: Stocks that pay large dividends, like phone and utility companies and real estate investment trusts, all traded lower. Those stocks are most appealing to investors when bond yields are low. American Tower fell $4.64, or 4.4 percent, to $101.07 and NextEra Energy lost $2.42, or 2.1 percent, to $111.12.
TRUMP FACTOR: Stocks went into a long skid as the presidential campaign came to its conclusion, but in the last few days stocks have risen as investors hope a Trump presidency will mean cutbacks in regulations that affect energy and banks, among other businesses. The Dow has reached record highs, with the biggest recent gains going to financial firms Goldman Sachs and JPMorgan, machinery maker Caterpillar and drug company Merck.
ENERGY: With the dollar gaining strength, benchmark U.S. crude fell 59 cents, or 1.4 percent, to $42.82 a barrel in New York. Brent crude, used to price international oils, lost 55 cents, or 1.2 percent, to $44.20 a barrel in London.
OVERSEAS: France’s CAC 40 was up 0.4 percent and Germany’s DAX rose 0.3 percent. The FTSE 100 index of leading British shares was 0.3 percent higher. In Japan the Nikkei 225 jumped 1.7 percent after a strong reading on Japan’s economic growth. The dollar has been particularly strong against the Japanese yen lately and that’s helped the country’s exporters. Most other Asian markets fell. The Kospi in South Korea lost 0.5 percent and Hong Kong’s Hang Seng slipped 1.4 percent.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info