Stocks climb for 3rd day in a row, erasing Monday's plunge

NEW YORK (AP) -- Stocks marched higher for the third day in a row Thursday, erasing the big plunge they took on Monday on worries about the worsening trade fight between China and the U.S.

Banks reversed course and helped lead the broad gains. Banks were benefiting from higher bond yields, which allow them to charge higher interest rates on loans. Bank of America added 1.7% and Citigroup rose 1.9%. Bond yields rose following a surprising rise in new home construction in April.

The steady gains mark a turnaround from Monday, when stocks took a nosedive after Beijing issued retaliatory tariffs on U.S. goods, ratcheting up tensions between the two largest economies in the world.

The S&P; 500 and the Nasdaq are now both higher for the week following steep drops on Monday. The Dow Jones Industrial Average is nearly back to breakeven.

Technology stocks were also big gainers. The sector, which is highly exposed to trade tensions with China, has been volatile all week. Microsoft added 2.6%.

Utilities and real estate companies lagged the market, another sign that investors were becoming more comfortable holding riskier assets. 

RELATED: Take a look at the products Walmart believes could get slammed by trade war:

26 PHOTOS
Products Walmart worries could get slammed by Trump's trade war
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Products Walmart worries could get slammed by Trump's trade war
1. Mandarin oranges in cans
2. Rawhide for pets

3. Hair care

(Photo by: Jeffrey Greenberg/UIG via Getty Images)

4. Other bath prep

(REUTERS/Lucas Jackson)

5. Dog leashes, dog collars

(REUTERS/Caitlin Ochs)

6. Cat leashes, pet costumes
7. Hard luggage
8. Luggage, tote bags, duffle bags, handbags
9. Travel bags
10. Handbags

11. Backpacks

(Photo by Bradley C. Bower/Bloomberg via Getty Images)

12. Rolled wrapping paper
13. Gas grills
14. Makeup mirrors

15. Vacuum cleaners

(Photo by Tim Boyle/Getty Images)

16. Toothbrush replacement heads
17. Electric razors

18. Air conditioners

(Photo by Stephen Hilger/Bloomberg via Getty Images)

19. HDMI cables, video cables, extension cords, auxiliary cords
20. Oil-less fryers and toaster ovens

21. Bicycles

(Timothy Fadek/Bloomberg via Getty Images)

22. Futons
23. Wooden furniture

24. Miscellaneous furniture, like infant pack-and-plays or patio furniture

25. Mattresses

(Photo by Milbert O. Brown/Chicago Tribune/MCT via Getty Images)

26. Christmas lights

(Patrick T. Fallon/Bloomberg via Getty Images)

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KEEPING SCORE: The S&P; 500 index rose 1.4% as of noon Eastern Time. The Dow Jones Industrial Average rose 288 points, or 1.1%, to 25,933 points. The Nasdaq composite rose 1.5%.

GOOD CONNECTION: Cisco jumped 6.9% after the company beat Wall Street's fiscal third quarter earnings forecasts. The maker of gear that connects computers also issued a solid forecast for the current quarter. The company said it has factored in the escalating trade war between the U.S. and China and sees "very minimal impact" ahead.

WALMART WHIPS GROWTH: Walmart rose 2.7% after reporting a surge in a key sales measure, fueled by a growing grocery sales business. The company also said online sales rose 37% as it expanded online grocery services.

The world's largest retailer also beat Wall Street's profit forecasts for the first quarter. The company has been working to get more people into its stores and use its online shopping service. It recently launched next-day delivery as it faces tougher competition from other retailers and Amazon.

BANKS BOUNCE BACK: Banks and other financial services companies all moved higher after solid housing data helped nudge bond yields higher. The yield on the 10 year Treasury rose to 2.40%.

JPMorgan Chase rose 1.8%, American Express rose 1.4% and M&T; Bank rose 1.8%.

The higher yields follow the Commerce Department's report that U.S. home construction rose faster than expected by economists in April. The solid report follows a series of weak economic reports on Wednesday that shoved bond yields sharply lower and weighed down the entire financial sector.

Higher yields allow banks to charge higher interest on loans.

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