May 24, 2016 / 2:07 PM / in 2 years

US STOCKS-Wall St opens higher, banks gain on rates speculation

* Best Buy down on weak forecast

* Toll Brothers rises as revenue beats expectations

* Indexes up: Dow 0.87 pct, S&P 0.77 pct, Nasdaq 0.85 pct (Updates to open)

By Tanya Agrawal

May 24 (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 percent 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 St. Petersburg, 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.

Traders are now pricing in a 30 percent chance of a June hike, up from 4 percent last week, as inflation creeps towards the Fed’s 2 percent target rate and the labor 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 a.m. ET (1339 GMT) the Dow Jones industrial average was up 153.06 points, or 0.87 percent, at 17,645.99, the S&P 500 was up 15.73 points, or 0.77 percent, at 2,063.77 and the Nasdaq Composite was up 40.60 points, or 0.85 percent, at 4,806.38.

Bank of America, JPMorgan and Citigroup were all up about 1.5 percent each.

Oil prices were up slightly after falling for four straight days on rising production from major exporters and as the dollar strengthened.

Toll Brothers shares were up 4.3 percent at $28.26 as the company’s quarterly revenue beat expectations.

Best Buy was down 4.8 percent at $31.43 after the consumer electronics retailer forecast current-quarter profit below analysts’ estimates and said its chief financial officer was stepping down.

Footwear and accessories retailer DSW fell 10 percent to $19.55 after the company slashed its forecast.

Advancing issues outnumbered decliners on the NYSE by 2,182 to 471. On the Nasdaq, 1,693 issues rose and 496 fell.

The S&P 500 index showed 10 new 52-week highs and no new lows, while the Nasdaq recorded 25 new highs and nine new lows. (Reporting by Tanya Agrawal; Editing by Anil D’Silva)

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