NEW YORK -- Banks led the stock market higher Monday as investors anticipate that the Federal Reserve is now more likely to 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 leaning toward an interest-rate increase in December or even at its next policy meeting in September. Fed Chairman Janet Yellen said at a conference last week that the case for raising rates was strengthening given improvements in the economy.
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 also 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.
Shares of 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.
Overseas, France's CAC 40 fell 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, and 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 feet.
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 Friday.
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.
Business on 08/30/2016