U.S. stocks edged higher on Wednesday as gains in financial and technology stocks offset declines caused by a recent surge in bond yields.
Bank stocks have risen 10 percent since the start of the month as benchmark yields have climbed enough to make lending and trading more profitable.
"What's giving the financials a little boost is a more positively sloped yield curve, which means better profit for them," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
Yields reached a six-month high this week after the initial deal reached in Washington to extend tax cuts fueled concern about inflation and the government's debt burden.
JP Morgan Chase & Co (NYSE:JPM - News) gained 2.6 percent to $40.27. The KBW Bank index (Philadelphia:^BKX - News) climbed 2.9 percent.
By the same token, the higher bond yields capped gains on the major stock indexes as they make it more expensive for consumers and businesses to borrow, while stocks and the dollar have moved in opposite directions of late. A rise in yields and the dollar could also draw money away from equities.
Dow Jones Industrial Average
(DJI: ^DJI )| Index Value: | 11,372.48 |
|---|---|
| Trade Time: | 4:02PM EST |
| Change: |  13.32 (0.12%) |
| Prev Close: | 11,359.16 |
|---|---|
| Open: | 11,354.30 |
| Day's Range: | 11,327.49 -11,389.09 |
| 52wk Range: | 9,596.04 - 11,507.30 |
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