US STOCKS-Banks and tech drive Wall St up over 1 percent
* Twitter drops after brokerage downgrade
* Toll Brothers up on revenue beat
* New U.S. home sales touch 8-year high in April
* Indexes end up: Dow 1.22 pct, S&P 1.37 pct, Nasdaq 2.0 pct (Updates to close)
By Noel Randewich
May 24 (Reuters) - Wall Street surged over 1 percent on Tuesday and the Nasdaq had its strongest day in three months as investors made peace with the possibility that the U.S. Federal Reserve might soon raise interest rates.
Comments from policymakers in recent days have investors expecting a rate hike potentially in June, much sooner than previously thought given sluggish economic growth.
Wall Street has benefited from historically low borrowing costs since the 2008 financial crisis and higher rates could choke further gains. But strategists on Tuesday said they were reassured by expectations the Fed would tighten borrowing costs only gradually.
"The market is starting to contemplate the idea that Fed rate hikes this year are A: more likely, and B: not inherently bad in and of themselves," said Bill Merz, an investment strategist with U.S. Bank Wealth Management. Continuación...