Shares of banks and other financial institutions rose as traders bet the increase in Treasury yields will resume in an orderly fashion.
"The market is exhibiting withdrawal symptoms as it is dealing with the possibility of the removal of the Fed put," said Anu Gaggar, global investment strategist for financial advisory Commonwealth Financial Network, referring to the theoretical floor that central-bank policy put under the stock market in recent years.
"It almost feels like the market is behaving a little incoherently, not knowing which way to go - go down because the Fed is tightening or go up because the Fed is finally acting to rein in inflation and is loading up on ammunition while economic growth remains strong," said Gaggar, in a note to clients.
The Fed's plan to gradually boost interest rates should buoy bank profits, as long as financial markets and economic growth are not up-ended by the hikes, Wall Street strategists say.
American Express shares rose after fourth-quarter earnings surpassed estimates thanks to a rebound in travel-and-leisure spending.
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(END) Dow Jones Newswires