Regional bank stocks came to life Tuesday as the stock market overall feasted on favorable consumer confidence news.
UMB Financial, based in Kansas City, closed up 2.1 percent. Commerce Bancshares, also headquartered here, close up .5 percent. Capitol Federal Financial gained .3%.
H Block, the tax preparation and financial services company, closed up 1.7 percent. Waddell Reed, the Overland Park-based financial services and mutual fund company, gained 2 percent. Kansas City Life closed up 1.7 percent.
Among non-financial companies, Kansas City Southern rose 2.2 percent.
On Wall Street, a rally that brought the stock market to record highs this year came back to life after U.S. home prices rose the most in seven years and consumer confidence reached a five-year high. As stock prices rose investors sold bonds, sending interest rates higher.
The Dow Jones industrial average rose 106 points to close at another record Tuesday, bouncing back from a loss the week before. The Standard Poor's 500 index also gained. The S is on track for its seventh straight monthly gain, the longest winning streak since 2009.
“They say the stock market tends to lead the economy. Now we're starting to see the improvement on the economic front, so there's some justification for this rally,” said Ryan Detrick, a senior technical strategist at Schaeffer's investment research.
The yield on the 10-year Treasury note jumped to 2.17 percent, its highest level since April 2012, as investors moved money out of safe assets and into riskier ones like stocks. That's a big jump from Friday's level of 2.01 percent. Markets were closed Monday for Memorial Day.
The stock market is coming off a rare loss last week, when both the Dow and the S 500 index had their first losing weeks in a month. Investors worried that the Federal Reserve might slow its extraordinary economic stimulus measures, which have also supported the stock market's advance.
Part of the reason for the increase in bond yields is anticipation that the Fed may ease back on its $85 billion a month in bond purchases. Tim Courtney, chief investment officer at Exencial Wealth Advisors, is among those who see a bleak outlook for the bond market. Rising inflation will eventually lead to higher interest rates, Courtney said, and losses for bond investors.
“The only way that bonds can make money from here is if we go a prolonged period of time with very, very low inflation and rates just don't move up a whole lot at all,” said Courtney. “Under any other scenario they lose.”
The Standard Poor's/Case-Shiller survey, which was released before stock trading opened, found that U.S. home prices rose 10.9 percent in March, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes. Beazer Homes jumped 63 cents, or 3 percent, to $21.96.
Stocks extended their gains in the morning after the Conference Board reported at 10 a.m. that its measure of consumer confidence rose in May to its highest level since February 2008.
The Dow was up as much as 218 in the early going, then gave up some of its gain in the afternoon.
Some analysts judged that investors were booking gains with the end of the month approaching on Friday. The Dow is up 3.8 percent so far in May. The S 500 is 3.9 percent higher.
“It's the end of the month,” said Quincy Krosby, a market strategist at Prudential Financial. “If you've been long and you'd done very well you want to lock in those gains.”
The Dow closed 106.29 points, or 0.7 percent, higher at 15,409.39. The index has risen for 20 straight Tuesdays. The longest streak of consecutive gains for any day of the week was sent in 1968, when there were 24 gains on Wednesdays, according to Schaeffer's Investment Research.
The S 500 index rose 10.46 points, or 0.6 percent, to 1,660.06. The Nasdaq composite index climbed 29.74 points, or 0.9 percent, to 3,488.89.
The gains were broad. Eight of the 10 industry groups in the S 500 index rose, led by financial stocks. The only ones that fell were utilities and telecommunication stocks, which investors tend to buy when they're seeking stable, safe stocks that pay high dividends. All but six of the 30 stocks in the Dow rose.
The Dow has advanced 17.6 percent this year and the S 500 index is 16.4 percent higher as investors have piled into stocks.
Unlike the first three months of the year, when the biggest gains were in large, stable companies like consumer staple makers that pay big dividends, in recent weeks investors have been bidding up the stocks of companies that have more to gain if the economy strengths. That shift out of lower-risk stocks and into more “cyclical” stocks, like banks and industrial companies, means investors are becoming more aggressive in seeking returns and more comfortable taking on risk.
Another bullish signal for the market is the strong growth in small-company stocks. Those stocks have a greater potential for appreciation but also tend to carry greater risk than large, diversified companies. The preference for small stocks was on display again Tuesday as the Russell 2000 index of small-company stocks rose 1.3 percent, more than other market indexes, to 997 points, a gain of 13 points. Its year-to-date increase of 17.4 percent is 1 percentage point greater than that of the S 500.
The BATS 1000 rose 110.01 points, or 0.59 percent, to close at 18,642.86.
Capitol Federal Financial rose 3 cents, or 0.25%, to close at $12.00.
Cerner Corp. fell 64 cents, or 0.67%, to close at $95.45.
Commerce Bancshares Inc. rose 22 cents, or 0.51%, to close at $43.70.
Compass Minerals rose 84 cents, or 0.95%, to close at $88.96.
DST Systems Inc. rose 94 cents, or 1.38%, to close at $69.13.
Ferrellgas Partners L.P. rose 18 cents, or 0.84%, to close at $21.51.
Garmin Ltd. rose 38 cents, or 1.08%, to close at $35.50.
Great Plains Energy fell 43 cents, or 1.85%, to close at $22.80.
H Block Inc. rose 49 cents, or 1.68%, to close at $29.68.
Inergy L.P. rose 3 cents, or 0.12%, to close at $24.39.
Kansas City Life Insurance Co. rose 65 cents, or 1.73%, to close at $38.20.
Kansas City Southern rose $2.45, or 2.20%, to close at $113.82.
Layne Christensen Co. rose 62 cents, or 2.91%, to close at $21.90.
O'Reilly Automotive Inc. rose 1 cents, or 0.01%, to close at $110.75.
Sprint Nextel Corp. fell 6 cents, or 0.82%, to close at $7.27.
UMB Financial Corp. rose $1.08, or 2.05%, to close at $53.76.
Waddell Reed Financial Corp. rose 92 cents, or 2.03%, to close at $46.34.
YRC Worldwide Inc. fell 72 cents, or 3.56%, to close at $19.48.