Financial sector rallies as bond yields rise
The S&P 500 financial sector jumped on Monday, easily outperforming the negative slant of the overall market as long-dated bond yields moved higher. The sector rose 0.5% and was the biggest percentage gainer of the 11 primary S&P 500 industry groups by far. Nine of the sectors were in negative territory, and the only other positive group, health-care stocks, rose less than 0.1%. Among notable movers in the financial sector, JPMorgan Chase & Co. rose 0.9% while Bank of America Corp. was up 1.1%. Wells Fargo & Co. rose 1.3%. The gains came as bond yields moved higher, with the 10-year U.S. Treasury Note gaining 5 basis points to 2.95%, a five-year high, while the 30-year note added 5 basis points to 3.08%, its highest level in more than a month. Bank stocks tend to benefit in a rising-rate environment as it boosts their net interest margin, or the difference between the interest they earn on the loans they make and the interest they pay out. Higher NIMs can lead to higher profits. The Dow Jones Industrial Average fell 0.3% while the S&P 500 slipped 0.2% and the Nasdaq Composite Index was down 0.3%.