Bank stocks in broad rally as 10-year yield climbs to 5-month high

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Bank stocks surged Tuesday, as a jump in the 10-year Treasury yield to a five-month high provided a boost. The SPDR Financial Select Sector ETF hiked up 2.0% to pace all the SPDR ETFs tracking the S&P 500’s 11 key sectors, with 64 of its 65 equity components gaining ground. Among the ETF’s more heavily weighted components, shares of J.P. Morgan Chase & Co. ran up 2.8%, Banc of America Corp. climbed 2.5%, Citigroup Inc. rallied 2.6% and Wells Fargo & Co. tacked on 2.1%. Goldman Sachs Group Inc.’s stock rose 3.2% to pace the Dow Jones Industrial Average’s winners. The 10-year Treasury yield rose 2.7 basis points to 0.876%, the highest yield seen since June 8, as expectations that a Democratic victory in the elections would lead to another reflationary fiscal package. And higher longer-term yields can boost bank profits, as it increases the spread they can earn on longer-term assets, such as loans, that are funded by shorter-term liabilities.
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