The decline in 10-year Treasury note price pushed up its yield almost 10 basis points to 3.16%, bolstering financial stocks but hurting homebuilders on the prospect of higher mortgage rates.
The Financial Select Sector SPDR ETF (NYSEARCA:XLF) rose 0.9% during regular trading, and increased 0.1% in after-hours trading.
Most regional banks fared even better: New York Community Bancorp (NYSE:NYCB) +2.24%, Fifth Third Bancorp (NASDAQ:FITB) +2.0%, Regions Financial (NYSE:RF) +2.0%, Bank OZK (NASDAQ:OZK) +2.0%, and KeyCorp (NYSE:KEY) +1.9%.
With all indications that the Fed is on track to hike interest rates again in December, higher interest rates help banks and other financial stocks, but it makes it more expensive to buy a house.
Homebuilders suffered. iShares US Home Construction ETF (BATS:ITB) sank 1.3%. K.B. Homes (NYSE:KBH) led the decline, -3.2%, followed by D.R. Horton (NYSE:DHI) -2.6%, PulteGroup (NYSE:PHM) -2.2%, NVR (NYSE:NVR) -2.3%, and Toll Brothers (NYSE:TOL) -2.0%
Previously: Stocks give up gains as bond selloff worsens (Oct. 3)
Previously: Chicago Fed's Evans says he's `comfortable' with a December hike: Bloomberg (Oct. 3)
Now read: Breakout Alert: Buy Bank Stocks »
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