US stocks climbed to their highest in the last seven sessions on Tuesday, May 24 buoyed by gains in tech and financial stocks.
The S&P financial sector SPSY was lifted following a rise in banking stocks as investors speculated on the possibility of a June interest rate hike.
Bank of America (BAC.N), JPMorgan (JPM.N) and Citigroup (C.N) were all up more than 1.5 percent each.
Minutes of the Federal Reserve’s April meeting suggested a June rate hike had not been ruled out, surprising investors who had thought the Fed would stand pat until the end of the year.
“I think investors are becoming more comfortable with an early rate hike because even if the Fed does raise rates in June, it will remain extremely accommodative,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
“I think the Fed wants to recalibrate the market’s expectations regarding a hike.”
Traders are now pricing in a 39 percent chance of a June hike, up from 4 percent last week, as inflation creeps toward the Fed’s 2 percent target rate and the labor market strengthens.
Data yesterday showed new US single-family home sales surged to a more than eight-year high in April and prices hit a record high, offering further evidence of a pick-up in economic growth.
The Philadelphia Housing Index .HGX climbed to a one-month high after the data.
At 11:07 a.m. ET (1507 GMT) the Dow Jones industrial average .DJI was up 209.97 points, or 1.2 percent, at 17,702.9, the S&P 500 .SPX was up 26.04 points, or 1.27 percent, at 2,074.08 and the Nasdaq Composite .IXIC was up 79.28 points, or 1.66 percent, at 4,845.06.
The S&P rose above its 50-day moving average for the first time in four days. The index has not closed above the closely watched metric in almost two weeks.
