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Financial stocks lead S&P 500 sectors higher as inflation data boosts Treasury yields

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The financial sector was the best performing of the S&P 500
SPX,
+0.33%

11 stock sectors Friday, after upbeat economic data pushed Treasury yields higher. The SPDR Financial Select Sector ETF
XLF,
+1.21%

rallied 1.2% in afternoon trading, with 61 of 65 equity components trading higher, while the S&P 500 edged up 0.3%. Among the ETFs top holdings, shares of Berkshire Hathaway Inc.
BRK.B,
+1.05%

tacked on 0.8%, J.P. Morgan Chase & Co.
JPM,
+1.01%

gained 1.0%, Bank of America Corp.
BAC,
+1.93%

advanced 2.1%, Wells Fargo & Co.
WFC,
+2.66%

climbed 2.8% and Citigroup Inc.
C,
+0.32%

edged up 0.4%. The sector’s rally comes as the yield on the 10-year Treasury note
TMUBMUSD10Y,
1.527%

rose 5.4 basis points to 1.541% after data showing the Federal Reserve’s preferred measure of inflation in May marked a third straight big increase. Bank profits can benefit from higher longer-term interest rates, because that can increase the spread between what banks earn on longer-term assets, such as loans, that are funded by shorter-term liabilities.

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