Shares of banks and other financial institutions rose amid optimism about the outlook for interest rates.

A recent Federal Reserve survey of lending officers showed standards tightening and demand waning, particularly on commercial and industrial loans.

"You start thinking maybe there's some issues beneath the surface, because, if there are some issues with lending, it's like cutting off the blood supply of either industrial sector or for the banks," said J.D. Joyce, president of Houston financial advisory Joyce Wealth Management.

Commercial real estate was the epicenter of the last market crisis in early 2023, and strategists are still monitoring a sector that's particularly sensitive to higher interest rates and postCovid lifestyle changes.

"Right now, real estate is the only sector of the 11 S&P 500 that's down year to date," said Joyce. "At a time where that sector's pretty beaten up, it looks as if the lending standards are tightening and that might make it hard for commercial-real estate to expand in a meaningful way."

Shares of Berkshire Hathaway rose after Warren Buffett's insurance-and-investment firm said first-quarter operating earnings jumped 39% to $11.22 billion.

Write to Rob Curran at

(END) Dow Jones Newswires

05-06-24 1725ET