WASHINGTON (REUTERS) - Wall Street opened higher on Tuesday, recouping some of Monday's losses, with banks among the biggest gainers as investors speculated on the possibility of a June interest rate hike.
Minutes of the Federal Reserve's April meeting suggested a June rate hike had not been ruled out, surprising investors who had thought the Fed would stand pat until the end of the year.
The gains were broad-based, with all 10 S&P sectors higher. The financial index's 1.2 per cent rise led the advance.
"Investors are looking for direction in terms of the health of the economy and the Fed's next move. Until we get that, the market will remain in a tight trading range," said Scott Brown, chief economist at Raymond James in Florida.
Several Fed officials struck hawkish tones in separate speeches on Monday, calling for two-three rate hikes in 2016 if supported by economic data.
Fed Chair Janet Yellen speaks on Friday (May 27).
Traders are now pricing in a 30 per cent chance of a June hike, up from 4 per cent last week, as inflation creeps towards the Fed's 2 per cent target rate and the labour market strengthens.
Low borrowing costs have helped the stock market enact a spectacular bull run since the 2008 financial crisis. Still, the S&P 500 has gone an entire year without registering a new high.
At 9.39 am ET (9.39pm Singapore time) the Dow Jones industrial average was up 153.06 points, or 0.87 per cent, at 17,645.99, the S&P 500 was up 15.73 points, or 0.77 per cent, at 2,063.77 and the Nasdaq Composite was up 40.60 points, or 0.85 per cent, at 4,806.38.
Bank of America, JPMorgan and Citigroup were all up about 1.5 per cent each.