Geoffrey Smith 

Investing.com — U.S. stocks opened higher Tuesday. Bank stocks responded well to the Federal Reserve Chairman Jerome Powell’s hawkish remarks that suggested a quicker pace of monetary tightening over the coming months. 

The stock was 0.6% higher at 34 766 points by 9:45 GMT (1345 GMT). Also, the index was up 0.6% while the was up 0.7%. All three indices finished lower on Monday, reversing earlier gains after Powell warned that inflation was “much too high” and that the Fed “may well reach the conclusion that we need to move more quickly.”

In a morning note, Goldman Sachs’ (NYSE:) analysts stated to clients that they expect 50 basis point increases at the Fed’s two next policy meeting.  Bond yields shot up in reaction to Monday’s news and rose by around five basis points on Tuesday. 

This movement was particularly supportive of bank stocks, as higher bond yields usually indicate greater lending margins. Bank of America (NYSE 🙂 stock rose 3.8% early on, and JPMorgan (NYSE 🙂 stock climbed 2.9% 

This news was also good for companies that have low leverage levels and large cash reserves. Berkshire Hathaway’s stock rose by 1.1% on Monday, following the purchase of insurance heavy conglomerate Alleghany.