FXEMPIRE
All

Rising Rates Help Banking Sector Lift U.S. Equity Markets

Bank shares are being driven higher by a jump in the U.S. Treasury note yield to 3.09 percent, its highest level since May. Higher rates tend to increase a bank’s profitability. Among the winners in the banking sector, J.P. Morgan Chase. It’s the best performing stock in the Dow.
James Hyerczyk
Stock Chart Up
Stock Chart Up

The major U.S. stock indexes are trading mixed across the board with the Dow leading the charge to the upside and the NASDAQ Composite struggling with a small loss. Stocks in the Dow and the S&P 500 Index are being led by a jump in bank shares in response to rising interest rates. Sentiment is up in the overall market, however, as investors increased bets on a favorable outcome in the trade dispute between the United States and China.

At 1644 GMT, the benchmark S&P 500 Index is trading 2909.01, up 4.70 or +0.16%. The blue chip Dow Jones Industrial Average is at 26446.94, up 199.98 or +0.76% and the technology based NASDAQ Composite is trading 7934.51, up 21.60 or +0.27%.

Bank shares are being driven higher by a jump in the U.S. Treasury note yield to 3.09 percent, its highest level since May. Higher rates tend to increase a bank’s profitability. Among the winners in the banking sector, J.P. Morgan Chase. It’s the best performing stock in the Dow.

The S&P 500 Index is being supported by the Financials sector which is up more than 1.5 percent. Individually, Goldman Sachs and Bank of America are up more than 2 percent, while Morgan Stanley gained 1.8 percent. Citigroup rose 2.5 percent.

In other stock market related news, Tesla shares fell 0.6 percent after the company said the Justice Department last month requested documents regarding CEO Elon Musk’s tweets in early August about taking the company private.

U.S.-China Trade Relations

On Wednesday, Chinese Premier Li Keqiang said China was facing “greater difficulties” in keeping its economy stable. He also said:  “Deeply integrated into the world economy, the Chinese economy is inevitably affected by notable changes in the global economic and trade context.” Li added, however, the Chinese have “sufficient tools” to manage these difficulties.

The comments suggest that China is digging in to resist the aggressive attempts by the Trump administration to force it to make concessions on trade. Although the headlines read on Tuesday that the trade dispute was escalating, the rally in the U.S. stock market suggests otherwise.

Trump knows the U.S. is operating from a position of strength because the economy is strong, earnings are healthy and confidence among consumers and investors remains high. Furthermore, more people are working and spending money.

Nonetheless, Robert Pavlik, chief investment strategist at SlateStone Wealth still senses an air of caution. He said on Wednesday, “Trade tariffs will remain a major concern not only to corporations but to market participants and especially to those professional investors who have never experienced a trade war outside of what they learned in college.”

Pot Stocks and Main Stream Investing

There’s a trend developing whereby mainstream companies are or thinking about partnering with cannabis producers. Earlier in the week, Aurora Cannabis rallied nearly 45 percent in Canadian trading after Canadian news service BNN Bloomberg reported Coca-Cola is in talks with Aurora to develop wee-infused beverages.

Now comes word that the world’s largest pharmaceutical companies are starting to think about partnering with cannabis producers as a “hedge” against the space.

“Cannabis is a substitute for prescription painkillers, prescription opioids, and so if you’re an investor in a pharmaceutical company or you’re a pharmaceutical company, you have to hedge the offset from cannabis substitution,” CEO of Tilray Brendan Kennedy said on Tuesday.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US