Bank stocks push indexes in U.S. higher

NEW YORK — Bank stocks jumped Tuesday amid hopes that bigger profits are ahead, and U.S. indexes again pushed to record highs.

Stocks had been mostly lower when the day’s trading began, but indexes reversed course after Federal Reserve Chair Janet Yellen told a Senate committee that the central bank could raise interest rates as soon as next month. Bond yields jumped immediately afterward and fed through to shares of banks, which can benefit from higher rates by charging more for loans.

The Standard & Poor’s 500 index rose 9.33 points, or 0.4 percent, to 2,337.58 for its sixth straight day of gains. The Dow Jones industrial average rose 92.25 points, or 0.5 percent, to 20,504.41. The Nasdaq composite rose 18.62, or 0.3 percent, to 5,782.57. Slightly more stocks rose on the New York Stock Exchange than fell.

Stocks have been on a strong run driven by expectations for more help for businesses from Washington, an improving economy and stronger-than-expected corporate earnings. The S&P 500 is up 9.3 percent since Election Day.

A demonstration of how much optimism is feeding into markets: Smallbusiness owners say they haven’t felt this encouraged in 12 years, according to a monthly survey released by the National Federation of Independent Business on Tuesday. Optimism made a sharp turn higher following the election, and more small businesses are saying they’re planning to hire.

Of course, such a high degree of excitement also leaves the possibility for disappointment if expectations aren’t met.

“The underlying momentum in the economy remains positive, so that gives us a positive bias toward the equity market, but we also know that there is a lot of volatility just around the corner,” Gayle said.

Yellen’s testimony helped the yield on the 10year Treasury note rise to 2.47 percent from 2.43 percent late Monday. The yield on the two-year Treasury rose to 1.24 percent from 1.21 percent, and the 30-year Treasury yield climbed to 3.06 percent from 3.03 percent.

While higher bond yields can help banks, they can also mean less demand for stocks that pay big dividends. Utility stocks in the S&P 500, which are some of the market’s highest yielders, fell 0.7 percent. It was the largest loss among the 11 sectors that make up the index. Realestate investment trusts, which have relatively big dividend yields, were also weak.

Cynosure, which makes devices used in laser body contouring, hair removal and skin care, soared after agreeing to be bought by medical device maker Hologic. Hologic will pay $66 a share, or $1.57 billion, for Cynosure, which had about $434 million in revenue last year. Cynosure rose $14.43, or 28 percent, to $65.93, while Hologic fell 99 cents, or 2.5 percent, to $39.03.