August 29, 2016 / 3:27 PM / 2 years ago

REFILE-US STOCKS-Wall St rises as hawkish Fed boosts financial stocks

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* Consumer spending rises for fourth straight month in July

* Herbalife rises after Icahn quashes reports of stake sale

* Indexes up: Dow 0.56 pct, S&P 0.47 pct, Nasdaq 0.21 pct

By Yashaswini Swamynathan

Aug 29 (Reuters) - Wall Street snapped a three-day losing streak on Monday as financial stocks rose after Federal Reserve Chair Janet Yellen said the case for an interest rate hike had strengthened.

Yellen, addressing a gathering of global central bankers on Friday, said the central bank was close to meeting its goals of maximum employment and stable prices, while describing consumer spending as “solid”.

Yellen gave little indication of when the Fed would move but

Vice Chairman Stanley Fischer suggested that a move as soon as next month could be possible.

Financial stocks, which stand to gain the most in a higher interest rate environment, rose as traders raised bets on a hike in the coming months.

The S&P 500 financial index rallied 1.05 percent, trading at its highest level since Dec. 16, when the U.S. central bank raised interest rates for the first time in nearly a decade.

Gains in the sector outperformed the other nine major S&P 500 indexes that were trading higher.

Wells Fargo rose 1.7 percent and provided the biggest boost to the S&P, while JPMorgan and Bank of America rose about 1 percent.

“I think the market’s getting more comfortable with the idea that the Fed is going to raise rates this year,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners.

“The Fed is walking on a tightrope, by talking about a rate hike, but not necessarily spooking the markets.”

The chances of a rate hike in September jumped to 30 percent from 21 percent, while the measure rose to 45.1 percent from 41.4 percent for December, according to CME Group’s FedWatch tool.

Adding to the sentiment was consumer spending data on Monday that pointed to a pickup in economic growth. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose for the fourth straight month in July.

Still, in the 12 months through July, the core personal consumption expenditure, the Fed’s preferred inflation measure, increased 1.6 percent, below its 2 percent target.

At 11:03 a.m. ET (1503 GMT), the Dow Jones Industrial Average was up 103.55 points, or 0.56 percent, at 18,498.95.

The S&P 500 was up 10.23 points, or 0.47 percent, at 2,179.27.

The Nasdaq Composite was up 11.11 points, or 0.21 percent, at 5,230.03.

The dollar index rose 0.25 percent, trading at more than a two-week high, while oil prices slipped more than 1 percent.

Mylan shares rose 1 percent after the drugmaker announced a generic version of its allergy treatment EpiPen.

Herbalife rose 3 percent after Carl Icahn bought 2.3 million shares in the nutritional supplements maker after denying reports of attempts to sell his stake.

Advancing issues outnumbered decliners on the NYSE by 2,031 to 800. On the Nasdaq, 1,570 issues rose and 1,051 fell.

The S&P 500 index showed 14 new 52-week highs and two new lows, while the Nasdaq recorded 80 new highs and 10 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Don Sebastian)

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