Shares of banks and other financial institutions rose as traders bet conditions would be favorable for the sector, despite fears about interest rates and an artificial-intelligence bubble.

"The broad-based resilience in second-quarter [earnings] results should help dispel some of the concerns surrounding the U.S. economy and support the rich market valuations," said strategists at brokerage Jefferies in a note. "AI and Mag[nificent] 7 led from the front, but strength was also visible in financials, suggesting a resilient macro."

Two Federal Reserve dissenters saw rising unemployment as a risk and persistent inflation as unlikely, according to minutes from the central bank's July meeting.

Treasury yields fell after President Trump called for the resignation of Federal Reserve governor Lisa Cook, citing allegations of mortgage fraud levelled against Cook by Bill Pulte, head of the Federal Housing Finance Agency.