U.S. Stocks Led Higher by Financial Companies

By Riva Gold Features Dow Jones Newswires

German 10-year bund yield climbs to 0.4%

Continue Reading Below

-- Stock markets in Europe and Asia extend losses

-- Tech companies remain under pressure

Shares of financial companies led U.S. stocks higher Wednesday.

Following its biggest daily drop in more than a month, the Dow Jones Industrial Average rose 120 points, or 0.6%, to 21431 shortly after the opening bell. The S&P 500 gained 0.6% and the tech-heavy Nasdaq Composite added 0.3% coming off its biggest one-day percentage drop since June 9.

Shares of S&P 500 financial stocks were up 1.3% Wednesday and are up more than 5% in June after the Federal Reserve raised interest rates, helping financials erase losses from earlier this year. Higher rates tend to help banks' net-interest margins, a key measure of lending profitability.

Continue Reading Below

The yield on the 10-year Treasury note was recently 2.240%, according to Tradeweb, compared with 2.198% Tuesday.

Technology shares flipped between slight gains and losses in the S&P 500. Tech has been the index's best-performing sector this year, but is down about 2% this month.

"Everybody remembers the [year] 2000 slipping of the tech sector," said Jae Yoon, chief investment officer at New York Life Investment Management. "But I have no concerns about tech valuations," he said, noting that in terms of price-to-earnings metrics, the sector is trading much closer in line to the S&P 500 than it did at its peak.

Elsewhere, the euro and government bond yields were choppy as investors reassessed the course of eurozone monetary policy.

The Stoxx Europe 600 followed Asian markets lower amid weakness in the technology sector, but pared losses to trade down 0.2% recently. Investors were reassessing a speech by European Central Bank President Mario Draghi Tuesday that many interpreted as suggesting that the bank might start winding down its massive stimulus program in response to a pickup in the eurozone economy.

After rising to its highest level in a year earlier Wednesday, the euro fell slightly and was recently up 0.4% at $1.1381, following media reports suggesting the ECB thought market participants over-interpreted Tuesday's speech.

Investors sold government bonds this week amid worries their value might fall if the central bank starts reducing its massive bond-buying program sooner than expected. Yields on 10-year German bunds fell to 0.372% from as high as 0.406% earlier in the day but remained well above where they started the week.

"The speech [from Mr. Draghi] seemed to mark a transition from the 'whatever it takes' period to 'it will take less' and a potential slow turning point in the direction of travel toward tighter policy," said Jim Reid, strategist at Deutsche Bank.

Technology shares led declines in Europe and Asia following losses in their U.S. counterparts Tuesday.

Japan's Nikkei Stock Average fell 0.5% but higher sovereign-debt yields supported shares of Japanese insurers which are heavy buyers of such securities.

Amrith Ramkumar and Ese Erheriene contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

June 28, 2017 10:43 ET (14:43 GMT)