The S&P 500 hit fresh intraday record highs Friday, recovering from a slump a day earlier, led by financials as banks climbed strongly after U.S. bond yields steadied.
The S&P 500 rose 1.1%, hitting a record high of 4,269.20 The Dow Jones Industrial Average gained 1.30%, or 443 points, the Nasdaq was up 0.92%.
The U.S. bond yields found their footing as the 10-year yield recovered from a slip below 1.3% a day earlier. The move higher in yields sparked a bid in regional banking stocks, lifting the overall financial sector more than 2% higher.
State Street (NYSE:STT), Capital One Financial Corporation (NYSE:COF) and Synchrony Financial (NYSE:SYF) were among the biggest gains, up more than 4%.
Higher interest rates boost the return on interest that banks earn from their loan products, or net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to depositors.
“The recent decline [in yields] appears to be rooted in a reassessment of second-half growth expectations. While data remains solid, a slower pace of expansion relative to record highs in the first half have undermined arguably overly optimistic forecasts for GDP going forward,” Stifel said in a note.
The rally in banking stocks comes just days before major Wall Street banks kick off the quarterly earnings season in earnest on Tuesday.
Tech stocks, meanwhile, also benefitted from strength in semiconductor stocks with Qualcomm (NASDAQ:QCOM) Taiwan Semiconductor Manufacturing (NYSE:TSM), and NXP Semiconductors NV (NASDAQ:NXPI) rising.
Big tech shrugged off further regulatory threats after President Joe Biden signed an order to increase competition in the biggest industries including tech.
Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT, and Apple (NASDAQ:AAPL) were above the flatline. Amazon.com (NASDAQ:AMZN) was slightly lower.
In other news, General Motors (NYSE:GM) gained nearly 5% after Wedbush initiated coverage on the stock with a buy rating, and said the automaker’s progress with battery technology could help it rack up market share against its rivals.