Shares of banks and other financial institutions rose as traders rotated back into a sector that benefits from gradually rising interest rates.

The financial sector could struggle, however, if the Federal Reserve hikes rates more aggressively than currently anticipated.

"Historically strong economic growth suggests the Fed's recent rate hike may be the first in a broader tightening cycle," said Richard Bernstein, global head of macro and customized investing at money manager Janus Henderson, in e-mailed commentary.

Bernstein characterized the Fed's plans as "taking the punchbowl away from the party."

Strategists at the BlackRock Investment Institute reversed a longstanding underweight position on U.S. Treasurys. The strategists urged clients to lock in yields on Treasurys after long-term rates hit 24-year highs and ahead of inflation data, which "could shift Fed rate expectations."

BlackRock recommended investors sell U.S. equities to fund Treasury purchases, reflecting expectations of "potential volatility around the AI buildout."