FINANCIAL MARKETS

NEW YORK—Banks led the stock market higher Monday as investors anticipate that the Federal Reserve could 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 likely to nudge interest rates higher in December or even at its next policy meeting in September. Federal Reserve Chair Janet Yellen told 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 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.

Wells Fargo, the nation’s largest mortgage lender, rose $1.05, or 2.2 percent, to $49.56 and JP Morgan 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.

Herbalife added $2.80, or 4.6 percent, to $63.30 after Icahn said late Friday he had bought an additional 2.3 million shares in the supplements and weight-loss products company, and that he never gave an order to sell his $1 billion stake.