u.s. stocks rose and the 10-year treasury yield hit its highest level of the year as investors stepped up bets on a strengthening u.s. economy. bank shares and u.s. government bond yields climbed anew after data on housing, employment and inflation <u+2014>as well as comments from federal reserve chairwoman janet yellen <u+2014>bolstered expectations that the central bank will raise interest rates next month. since last week, investors have been pouring money into financial shares and pulling money out of government bonds , with many expecting donald trump <u+2019>s election would mean a more expansive fiscal policy, higher inflation and ultimately higher u.s. interest rates. those trades picked up again after stalling<u+00a0>wednesday, when financial shares in the s&p 500 and 10-year u.s. treasury yields fell for the first time since nov. 4 . financials led gains in the s&p 500 on thursday, rising 1.25%. the yield on the benchmark 10-year treasury note rose to 2.278%, the highest yield since dec. 30, from 2.222%<u+00a0>on wednesday. yields, which rise as prices fall, have surged from 1.867% since the presidential election. the dow jones industrial average rose 36 points thursday, or 0.2%, to 18904. the s&p 500 rose 0.5% and the nasdaq composite added 0.7%. expectations for an interest-rate increase in december have grown in recent sessions. fed funds futures, used by investors to bet on central-bank policy, showed a roughly 91% chance of a rate rise at the fed<u+2019>s meeting dec. 13-14, according to cme group . in prepared testimony for a congressional hearing thursday, ms. yellen reiterated that an increase in interest rates <u+201c>could well become appropriate relatively soon.<u+201d> also thursday, the number of americans applying for first-time unemployment benefits fell last week to its lowest level since november 1973, the labor department said, while u.s. consumer prices increased in october from a year earlier at the fastest rate in two years. the commerce department said u.s. housing starts and permits for new construction both rose in october. <u+201c>we<u+2019>ve been saying we<u+2019>ve got to see the end of the [35-year government bond] bull market sometime, and what we were lacking was a catalyst,<u+201d> said michelle mcgrade, chief investment officer at td direct investing. <u+201c>trump has been that catalyst.<u+201d> inflation is a threat to longer-term government bonds as it chips away at their value over time, while the prospect of higher growth and interest rates should help banks<u+2019> profits. those dynamics have also boosted the dollar. the wsj dollar index, which gauges the u.s. currency against 16 others, rose another 0.6% after eight straight sessions of gains . alan levenson, chief u.s. economist at t. rowe price , said he was waiting for clarity from mr. trump before changing his estimates for u.s. growth. mr. levenson said the case for stronger growth would depend on mr. trump<u+2019>s tax policies and fiscal stimulus, whereas on the negative side he was waiting for more details about the president-elect<u+2019>s possible plans to restrict immigration and trade. even amid the election focus, corporate earnings continued to drive some individual stocks. the biggest gainer in the s&p 500 on thursday was best buy, which jumped 14% after the electronics chain posted higher third-quarter sales on improvement in its online business . u.s. corporate earnings from the most recent quarter have surpassed expectations, while businesses and customers are beginning to feel more confident, said carol schleif, deputy chief investment officer of abbot downing, a unit of wells fargo that caters to clients with $50 million or more. <u+201c>once you get through the drama of the election, the market starts looking at fundamentals again,<u+201d> ms. schleif said. earlier, the stoxx europe 600 rose 0.6% following a muted session in asia . japan<u+2019>s nikkei stock average ended flat, while hong kong<u+2019>s hang seng inched down 0.1% and australia<u+2019>s s&p/asx 200 was up 0.2%. <u+2014>corrie driebusch contributed to this article. write to riva gold at riva.gold@wsj.com and daniel huang at dan.huang@wsj.com
u.s. stocks rise on economic optimism - wsj
riva gold daniel huang