U.S. Stocks Led Higher by Financial Companies

By Riva Gold Features Dow Jones Newswires

Shares of financial companies led U.S. stocks higher Wednesday, as major indexes rebounded from their worst session in weeks.

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The Dow Jones Industrial Average rose 158 points, or 0.7%, to 21469, following its biggest daily drop in more than a month. The S&P 500 gained 0.8% and the tech-heavy Nasdaq Composite added 0.9% coming off its biggest one-day percentage drop since June 9.

Financial stocks led gains in the S&P 500, rising 1.4%.

Investors' shifting expectations for the course of monetary policy in Europe drove some of the day's biggest moves.

Investors have sold government bonds this week amid worries their value might fall if the European Central Bank starts reducing its massive bond-buying program sooner than expected. But investors were reassessing a Tuesday speech by European Central Bank President Mario Draghi that many interpreted as suggesting that the bank might start winding down its stimulus program in response to a pickup in the eurozone economy.

The yield on the 10-year Treasury note was recently 2.216%, according to Tradeweb, compared with 2.198% Tuesday. Yields on 10-year German bunds were at 0.366%, down from as high as 0.406% earlier in the day but well above where they started the week. Yields rise as prices fall.

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After rising to its highest level in a year earlier Wednesday, the euro fell slightly and was recently up 0.2% at $1.1366, following media reports suggesting the ECB thought market participants over-interpreted Tuesday's speech.

Also Wednesday, Bank of England Gov. Mark Carney said interest rates in the U.K. may need to rise if the economy keeps improving.

The pound jumped 0.9% to $1.2934, weighing on the export-heavy FTSE 100, which fell 0.6%. The Stoxx Europe 600 was little changed.

Technology shares rebounded and were recently up 0.6% in the S&P 500. Tech has been the index's best-performing sector this year, but is down roughly 1.5% 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.

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 12:28 ET (16:28 GMT)