Banks lead US stock indexes higher, and dollar jumps again

NEW YORK — A surge in banks and other financial stocks that stand to benefit from higher interest rates lifted U.S. indexes Thursday. The dollar climbed to its strongest level in more than a decade against other currencies, and the price of gold sank on expectations that the Federal Reserve will follow up Wednesday’s rate increase with several more next year.

KEEPING SCORE: The Standard & Poor’s 500 index rose 9 points, or 0.4 per cent, to 2,263 as of 3 p.m. Eastern time. It has made up about half of its loss from the prior day, which was its worst in two months.

The Dow Jones industrial average rose 75 points, or 0.4 per cent, to 19,868. Earlier in the day, it climbed within 50 points of crossing above the 20,000 threshold for the first time. The Nasdaq composite rose 21 points, or 0.4 per cent, to 5,458. Earlier in the day, it rose above its record closing level of 5,463.83.

GO GREENBACK: The ICE U.S. Dollar index, which tracks the value of the dollar against the euro, Japanese yen and four other currencies, jumped 1.2 per cent and touched its highest level since 2002.

The dollar’s value has been generally climbing since 2014 because the U.S. economy is in better shape than others around the world, even with U.S. growth only modest. The dollar is jumping more now after the Federal Reserve raised short-term interest rates on Wednesday for just the second time in a decade and indicated three more increases may be on the way in 2017.

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The dollar rose to 117.98 Japanese yen from 116.37 late Wednesday, following up on a 1 per cent jump. The euro fell to $1.0419 from $1.0557, and the British pound fell to $1.2430 from $1.2596.

BANKING ON BIGGER PROFITS: Financial stocks in the S&P 500 jumped 1.3 per cent, far more than any of the other 10 sectors that make up the index. Higher interest rates could help banks reap bigger profits from making loans. Bank of America rose 60 cents, or 2.6 per cent, to $23.27, and Zions Bancorp. rose 85 cents, or 2 per cent, to $43.05.

MOSTLY HIGHER MARKET: Nearly three stocks rose for every two that fell on the New York Stock Exchange, and nine of the 11 sectors that make up the S&P 500 index climbed.

Stocks that pay big dividends lagged behind the rest of the market on fears that higher interest rates will push income investors away from them and into bonds. Real-estate stocks in the S&P 500 fell 0.4 per cent.

BOND YIELDS: The yield on the 10-year Treasury note ticked up to 2.59 per cent from 2.57 per cent late Wednesday, and it earlier was above 2.60 per cent. The two-year Treasury yield fell to 1.26 per cent from 1.27 per cent after earlier touching its highest level since the summer of 2009. The 30-year Treasury yield fell to 3.15 per cent from 3.18 per cent

BREACHED: Yahoo fell $2.35, or 5.7 per cent, to $38.56 after disclosing a breach that affected more than a billion user accounts, the largest such attack in history.

SAFE HARBOR: Pier 1 Imports surged $2.03, or 31.3 per cent, to $8.51 after reporting stronger-than-expected earnings for the latest quarter and raised its forecast for full-year results.

HEALTHY FORECAST: Eli Lilly jumped $3.85, or 5.7 per cent, to $71.52 after the drugmaker gave a stronger-than-expected profit forecast for next year.

TAKING OFF: Delta Air Lines rose 95 cents, or 1.9 per cent, to $50.77 after it told analysts that passenger revenue trends aren’t down as much this quarter as earlier feared and that it sees “good momentum” into 2017. It expects a key revenue measure to be down 3 per cent this quarter from a year earlier. It had earlier forecast a drop of 3 per cent to 5 per cent.

Alaska Air Group rose 4.7 per cent, United Continental Holdings rose 3.2 per cent and American Airlines Group rose 1.6 per cent.

MARKETS ABROAD: In Europe, Germany’s DAX rose 1.1 per cent, France’s CAC 40 gained 1 per cent and Britain’s FTSE 100 rose 0.7 per cent. In Asia, Japan’s Nikkei 225 index gained 0.1 per cent, Hong Kong’s Hang Seng fell 1.8 per cent and South Korea’s Kospi was virtually flat.

ENERGY: Benchmark U.S. crude slipped 14 cents to settle at $50.90 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, rose 12 cents to $54.02 a barrel in London. Natural gas fell 10.6 cents to $3.434 per 1,000 cubic feet, and wholesale gasoline rose nearly a penny to $1.54 per gallon. Heating oil was little changed at $1.64 a gallon.

METALS: Gold dropped to its lowest price in 10 months and settled at $1,129.80 per ounce, down $33.90, or 2.9 per cent. Higher interest rates often hurt the price of gold, which investors tend to flock to when they’re worried about the prospect of higher inflation and too-low interest rates.

Silver fell $1.26 to settle at $15.96 an ounce, and copper dipped by less than a penny to $2.60 per pound.

Stan Choe, The Associated Press