Regional Bank Stocks Trade Higher Ahead of Fed Policy Statement

NEW YORK (TheStreet) -- Regional Bank stocks were strong on Tuesday, as Janet Yellen began her first two-day meeting of the Federal Open Market Committee since taking over as Federal Reserve chairwoman last month.

The KBW Bank Index I:BKX rose 0.5% to 70.76, with all but three of the 24 component stocks ending with gains.   Comerica (CMA) of Dallas and New York Community Bancorp  (NYCB) of Westbury, N.Y., were the sector leaders, with both stocks rising 1.1%.  Comerica closed at $49.52, while NYCB closed at $16.28.

The Dow Jones Industrial Average was up 0.6%, while the S&P 500 added 0.7% and the NASDAQ Composite rose 1.3%, as investors looked ahead to Wednesday's policy statement from the Federal Open Market Committee (FOMC).

The FOMC is expected to continue winding down the central bank's monthly "QE3" purchases of long-term U.S. Treasury bonds and mortgage-backed securities, which ran at a pace of $85 billion a month from September 2012 through December of last year, with the pace declining to $75 billion in January and $65 billion in February.

Yellen has said the FOMC expects to wind-down the bond purchases by the end of 2014, economists believe will lead to a significant rise in long-term interest rates, although long-term rates have pulled back this year as investors' demand for Treasury paper has been strong. The market yield on 10-year U.S. Treasury bonds was 2.68%, down from 3.04% at the end of 2013, but up from 1.96% a year ago.

If you liked this article you might like

JPMorgan, U.S. Banks Face $3 Billion of Loan Losses From Catastrophic Hurricanes

14 Bank Stocks That Will Either Surge or Do Nothing

Mid-Cap Bank M&A Could Surge as GOP Looks to Overhaul Financial Regulations

Here's Why Mid-Sized Bank Stocks Could Get a Boost

Community Banks Could Be Big Winners in Treasury Regulation Overhaul