*
Feb CPI in line with expectations
*
Regional banks rebound
*
Meta rises on more layoff plans
*
Uber, Lyft gain following California court decision
*
Indexes up: Dow 0.23%, S&P 0.82%, Nasdaq 1.24%
(New throughout, adds NEW YORK dateline, changes byline)
By Stephen Culp
NEW YORK, March 14 (Reuters) - Wall Street rebounded on
Tuesday as largely on-target inflation data and waning fears
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 were green but off
earlier highs after several sessions of risk-off turmoil driven
by the implosion of Silicon Valley Bank and Signature bank, and
jitters over contagion.
Financial stocks clawed back some of their resulting losses,
with the S&P 500 Banks index bouncing back from its
steepest one-day sell-off since June 2020.
The KBW Regional Banking index was up 3.1%.
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 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.
"Friday the market was laser-focused on inflation but
clearly not any more," said Angelo Kourkafas, investment
strategist at Edward Jones in St. Louis. "The pace of this
inflation matters but now the Fed has to also consider the
rising risks in financial stability.
"So policy makers will be attentive to those risks and
likely pause sooner than they otherwise would've," Kourkafas
added.
Financial markets have now priced in a 75.3% likelihood that
the central bank will raise the Fed funds target rate by an
additional 25 basis points at the conclusion of its two-day
monetary meeting later this month, with a growing minority -
24.7% - seeing the potential of no rate hike at all, according
to CME's FedWatch tool.
Shock waves following the closure of Silicon Valley Bank and
Signature bank, which prompted President Joe 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 was last up 1.5% in the
wake of Monday's plunge, its biggest one-day drop since June
2020.
The Dow Jones Industrial Average rose 72.41 points,
or 0.23%, to 31,891.55, the S&P 500 gained 31.67 points,
or 0.82%, to 3,887.43 and the Nasdaq Composite added
139.00 points, or 1.24%, to 11,327.84.
Among the 11 major sectors in the S&P 500, all but real
estate were higher, with communication services enjoying the largest percentage advance.
Amid multiple volatility halts, shares of First Republic
Bank and Western Alliance Bancorp surged by
29.9% and 16.6%, respectively.
Meta Platforms Inc announced 10,000 job cuts in its second round of layoffs. Its stock advanced 6.2%. Ride-hailing app rivals Uber Technologies Inc and Lyft Inc rose 5.7% and 1.8%, respectively, after a California state court revived a ballot measure allowing the companies to treat drivers as independent contractors rather than employees. United Airlines Holdings Inc fell 5.5% after the commercial carrier unexpectedly forecast a current quarter loss. AMC Entertainment Holdings plummeted 17.9% between multiple trading halts after its shareholders voted in favor of converting preferred stock into common shares. Advancing issues outnumbered declining ones on the NYSE by a 2.62-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers. The S&P 500 posted 2 new 52-week highs and 12 new lows; the Nasdaq Composite recorded 20 new highs and 134 new lows.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Stephen Culp in New York Additional reporting by Sinead Carew in New York and Shubham Batra and Amruta Khandekar in Bengaluru Editing by Anil D'Silva and Matthew Lewis)
