Financial stocks rallied on Monday, pacing the broad market higher as investors remained optimistic about the direction of interest rates.
The Department of Commerce reported that personal spending rose at twice the rate of income, but financial stocks took the news well. The American Banker index of the top 50 banks rose 0.53% on Monday, its 225-bank index rose 0.17%, and the S&P 500 was up 0.51%. An report from J.P. Morgan stated that "the forecast now has the economy slowing to a 3.5% growth pace this quarter," leading it to change its position on a possible rate hike by the Federal Reserve this year. J.P. Morgan had expected a rate increase, and James F. O'Sullivan, an economist at the bank, said that "the limited comeback in consumption was one of the key reasons for the shift in view, and it still holds."