Dow, S&P gain with bank rally countering rate worries

Bank shares rallied after passing the Federal Reserve’s stress test, boosting the Dow and the S&P 500. Strong economic data also fueled expectations of further interest rate hikes. Treasury yields rose as recession fears eased, leading investors to focus on economically sensitive sectors. However, concerns that the Fed would maintain higher interest rates for longer dampened some rate-sensitive growth sectors. The S&P 500 banks index closed up 2.6%, and the relief rally also lifted the KBW Regional Banking index by 1.8%. The Dow rose 0.8%, while the S&P 500 gained 0.45%. The Nasdaq Composite ended slightly lower.