*
Feb CPI in line with expectations
*
Regional banks rebound
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Meta rises on more layoff plans
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Uber, Lyft gain following California court decision
(Adds analyst comment, updates to market close)
By Stephen Culp
NEW YORK, March 14 (Reuters) - U.S. stocks rebounded on
Tuesday as largely on-target inflation data and easing jitters
over contagion in the banking sector cooled expectations
regarding the size of the rate hike at the Federal Reserve's
policy meeting next week.
All three major U.S. stock indexes closed in positive
territory, after several sessions of risk-off turmoil driven by
the implosion of Silicon Valley Bank and Signature bank, and
worries over contagion.
Financial stocks clawed back some losses, with the S&P 500
Banks index coming back from its steepest one-day
sell-off since June 2020.
Bank contagion fears were allayed on Tuesday as reassurances
by U.S. President Joe Biden and other global policymakers vowed
the crisis would be contained.
"The market is having an opportunity to digest some of the
news over the last couple of days," said Matthew Keator,
managing partner in the Keator Group, a wealth management firm
in Lenox, Massachusetts. "(Investors) are seeing a coordinated
effort with various government agencies, and with hindsight,
they’re feeling as if things have contained themselves a bit."
The Labor Department's CPI report showed consumer prices
cooled in February, largely in line with market expectations,
with headline and core measures notching welcome annual
declines.
Even so, inflation has a considerable way to go before
approaching the central bank's average annual 2% target.
But signs of economic softness, combined with the regional
banking scare, have increased the odds that the Federal Reserve
will implement a modest, 25 basis-point hike to its key interest
rate at the conclusion of its two-day policy meeting on March
22.
"Part of the stabilization today is folks feeling as if the
Fed might back off from some of the hawkish expectations that
followed Chairman Powell's comments last week," Keator added.
"If the Fed isn't careful, they could create some unintended
shocks to the system," he said.
Shock waves following the closure of Silicon Valley Bank and
Signature bank, which prompted Biden to vow he would contain the
crisis and ensure the safety of the U.S. banking system,
continued to reverberate throughout the sector.
The S&P 500 banking index reclaimed territory lost
to Monday's plunge, its biggest one-day drop since June 2020.
According to preliminary data, the S&P 500 gained 64.26 points, or 1.67%, to end at 3,920.02 points,
while the Nasdaq Composite gained 239.71 points, or
2.14%, to 11,428.55. The Dow Jones Industrial Average rose 326.66 points, or 1.03%, to 32,145.80.
Shares of First Republic Bank surged.
Meta Platforms Inc announced 10,000 job cuts in its second round of layoffs, sending its stock higher. Ride-hailing app rivals Uber Technologies Inc and Lyft Inc jumped following a California state court decision that revived a ballot measure allowing the companies to treat drivers as independent contractors rather than employees. United Airlines Holdings Inc fell after the commercial carrier unexpectedly forecast a current quarter loss. AMC Entertainment Holdings plummeted between multiple trading halts in the wake of its shareholders voting in favor of converting preferred stock into common shares. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Stephen Culp in New York Additional reporting by Shubham Batra and Amruta Khandekar in Bengaluru Editing by Anil D'Silva and Matthew Lewis)
