Wall Street posts biggest gain in 2 months

Energy stocks among the gainers as oil rises for a fifth straight day

The U.S. stock market notched its biggest gain in two months Wednesday, bouncing back from losses a day earlier.

Banks and other financial companies led the rally as investors bet on interest rates climbing further. Banks can make more money on lending when rates move higher.

Technology companies were among the big gainers, recouping some of their recent losses. Energy stocks also rose as the price of crude oil closed higher for the fifth straight day. Utilities and real estate companies were the only laggards.

“Across the board, sector strength is very, very strong,” said Marc Chaikin, CEO of Chaikin Analytics. “Whoever wanted to sell into the holiday weekend basically did it yesterday, and we probably have a positive bias going into the four-day weekend.”

“These equity markets are perhaps in more of a relief rally, with investors coming back in after being away a bit here,” said Chris Gaffney, president of World Markets at EverBank. “It’s is the end of the quarter, so we’ll probably see more volatility going into the end.”

Traders bid up shares in financial sector companies amid heightened expectations that interest rates could be headed higher. Rising rates let banks make bigger profits on mortgages and other types of loans.

“Global rates are going to move higher, and that, of course, helps financials across the board,” Gaffney said.

West Texas intermediate for August delivery settled 50 cents higher at $44.74 a barrel on the New York Mercantile Exchange.

Oil has recovered all its losses from last week, when it slipped into a bear market, as concern over a supply glut eases.

A report that U.S. gasoline stockpiles fell helped futures cap a 5.5 percent increase over the past five sessions on Wednesday.

Inventories that have remained stubbornly high at the start of the summer driving season fell 894,000 barrels last week, the Energy Information Administration said.

While total U.S. crude stockpiles rose by 117,999 barrels, the amount of oil held at the Cushing, Okla., hub fell for the sixth week in a row.

In a survey conducted by the Federal Reserve Bank of Dallas, the majority of energy executives don’t expect the oil market will come into balance before the second half of 2018 — with a third saying it would be 2019 or later. The outlook on prices was tempered.

On average, respondents expect WTI to increase to $48.79 a barrel by year’s end.