Bank of America (BAC) rallied after Federal Reserve Chair Janet Yellen said the case for raising rates has improved, but JPMorgan Chase (JPM) and some other big banks pared Friday gains after her deputy back two hikes this year.
"Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Yellen said in Jackson Hole, Wyo.
Fed Vice Chairman Stanley Fischer followed up, saying that Yellen's comments are consistent with a September rate hike, while he said he still sees two rate hikes this year. Investors raised the odds of a near-term hike, but still see just one hike, in December.
Bank of America climbed 1.7% on the stock market today. Citigroup (C) rose 0.8% and Morgan Stanley (MS) 0.6%. JPMorgan rose 0.2%, Goldman Sachs (GS) climbed fractionally and Wells Fargo (WFC) advanced 0.3%.
IBD'S TAKE: Low rates continue to be among the main challenges for the banking industry. A Federal Reserve rate hike would effectively give banks the green light to raise their own interest rates, allowing them to take in more money from loans. Learn more on how to evaluate stocks here.
Some Fed officials have become more bullish on raising rates in recent weeks. St. Louis Fed President James Bullard told CNBC Friday that September could be a good time for a rate hike. Cleveland Federal Reserve President Loretta Mester told the network that the economy would get stronger in the second half of the year.
Analysts and investors had expected Yellen to use the speech to prime the U.S. for an eventual interest-rate hike.
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