Bank stocks climbed with Treasury yields

U.S. stocks ended higher on Wednesday, with bank stocks rising alongside yields on Treasury bonds this week.

The yield on the 10-year Treasury note rose to 2.19%, its highest level since June, as investors moved money into stocks from fixed-income assets. Bank stocks, which have underperformed the broader market this year, buoyed in recent sessions. They ended with better-than-expected earnings from large lenders. Central U.S. banks, including JPMorgan Chase and Citigroup, have raised their full-year profit outlooks.

On Tuesday, Wall Street ended higher, lifted by Microsoft and Apple. This week, a rise in Treasury yields boosted bank stocks ahead of a critical inflation reading.

The tech-heavy Nasdaq and the benchmark S&P 500 reversed early losses and gained in the session. Amazon.com Inc gained 2.3%, while Apple and Microsoft rose over 1.1%.

The S&P 500 banking index rebounded 1.8% after the benchmark 10-year U.S. Treasury yield beat its highest level. Moreover, it resulted from the expectations that the U.S. Federal Reserve would tighten monetary policy.

Shares of Bank of America Corp, Wells Fargo, and JPMorgan Chase & Co gained over 1.1%.

The S&P 500 energy sector index fell 2.2%. It happened as investors worried that indirect talks between Iran and the United States could restore an international nuclear agreement. They thought these countries would allow more oil exports from the OPEC producer.

Overview of the stocks and Treasury

The Dow Jones Industrial Average climbed 1.07% to end at 35,462.79 points. The S&P 500 gained 0.85% to 4,521.53.

The Nasdaq Composite rose 1.29% to 14,194.47.

On Tuesday, earnings stood mixed, with Pfizer Inc going down after the drugmaker’s full-year sales forecast for its COVID-19 vaccine. Antiviral pills dropped short of estimates.

Amgen Inc surged nearly 9% after it announced a buyback of up to $7 billion. The company also forecasted that earnings would double by 2030.