A surge in banks and other financial stocks that stand to benefit from higher interest rates led U.S. indexes higher Thursday. The dollar climbed to its strongest level in more than a decade against other currencies, and the price of gold sank on expectations that the Federal Reserve will follow up Wednesday’s rate increase with several more next year.
KEEPING SCORE: The Standard & Poor’s 500 index rose 13 points, or 0.6 percent, to 2,267 as of 10:45 a.m. Eastern time. It’s close to making up its loss from the prior day, which was its worst in two months.
The Dow Jones industrial average rose 120 points, or 0.6 percent, to 19,911. Nasdaq Composite rose 32 points, or 0.6 percent, to 5,469.
GO GREENBACK: The ICE U.S. Dollar index, which tracks the value of the dollar against the euro, Japanese yen and four other currencies, jumped more than 1 percent and touched its highest level since 2002.
The dollar’s value has been generally climbing since 2014 because the U.S. economy is in better shape than others around the world, even with U.S. growth only modest. The dollar is jumping more now after the Federal Reserve raised short-term interest rates on Wednesday for just the second time in a decade and indicated three more increases may be on the way in 2017.
The dollar rose to 118.42 Japanese yen from 116.37 late Wednesday, following a 1 percent jump from the day before. The euro fell to $1.0424 from $1.0557, and the British pound fell to $1.2419 from $1.2596.
BANKING ON BIGGER PROFITS: Financial stocks in the S&P 500 jumped 1.2 percent, far more than any of the other 10 sectors that make up the index. Higher interest rates could help banks reap bigger profits from making loans. Bank of America rose 42 cents, or 1.9 percent, to $23.10, and Wells Fargo rose $1.21, or 2.2 percent, to $55.91.
MOSTLY HIGHER MARKET: Three stocks rose for every two that fell on the New York Stock Exchange, and all 11 sectors that make up the S&P 500 index climbed.
Stocks that pay big dividends lagged behind the rest of the market on fears that higher interest rates will push income investors away from them and into bonds. Real-estate stocks in the S&P 500 rose just 0.3 percent.
BOND YIELDS: The yield on the 10-year Treasury note inched up to 2.59 percent from 2.57 percent late Wednesday. The two-year Treasury yield dipped back to 1.26 percent from 1.27 percent but remains close to its highest level since the summer of 2009. Yields on longer-term bonds slipped, and the 30-year Treasury yield dipped to 3.15 percent from 3.18 percent
BREACHED: Yahoo fell $1.60, or 3.9 percent, to $39.31 after disclosing a breach that affected more than a billion user accounts, the largest such attack in history.
SAFE HARBOR: Pier 1 Imports surged $2.40, or 37 percent, to $8.88 after reporting stronger-than-expected earnings for the latest quarter and raised its forecast for full-year results.
HEALTHY FORECAST: Eli Lilly jumped $2.26, or 3.3 percent, to $69.93 after the drugmaker gave a stronger-than-expected profit forecast for next year.
MARKETS ABROAD: In Europe, Germany’s DAX rose 0.9 percent, France’s CAC 40 gained 1 percent and Britain’s FTSE 100 rose 0.6 percent. In Asia, Japan’s Nikkei 225 index gained 0.1 percent, Hong Kong’s Hang Seng fell 1.8 percent and South Korea’s Kospi was virtually flat.
ENERGY: Benchmark U.S. crude fell 58 cents, or 1.2 percent, to $50.46 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, fell 24 cents to $53.66 a barrel in London.
METALS: Gold sank $33.40, or 2.9 percent, to $1,133.30 per ounce. Higher interest rates often hurt the price of gold, which investors tend to flock to when they’re worried about the prospect of higher inflation and too-low interest rates.
Silver sank 6.3 percent, to $16.13 an ounce, and copper slipped 0.3 percent to $2.60 a pound.
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