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Credit Suisse U.S. shares tank after buyout by UBS
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First Republic Bank shares slump
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PacWest Bancorp, New York Community Bancorp gain
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Indexes: Dow up 0.9%, S&P up 0.7%, Nasdaq up 0.2%
(Updates to afternoon trading, adds NEW YORK dateline)
By Caroline Valetkevitch
NEW YORK, March 20 (Reuters) - U.S. stocks were higher
in afternoon trading on Monday after a deal to rescue Credit
Suisse and central bank efforts to bolster confidence in the
financial system, while investors also weighed the likelihood of
a pause in rate hikes from the Federal Reserve this week.
UBS late on Sunday agreed to buy rival Credit Suisse for $3.23 billion, in a merger engineered by
Swiss authorities to avoid more turmoil in the banking group.
Major central banks moved on Sunday to bolster the flow of
cash around the world.
The collapse of Silicon Valley Bank and Signature Bank shook markets earlier this month.
While the focus remains on banks, "the situation at least
for now has passed, and the market is back in somewhat oversold
conditions due to this banking crisis, and buyers who sold
across the board are now coming back," Tim Ghriskey, senior
portfolio strategist at Ingalls & Snyder in New York.
The Credit Suisse takeover helped the market, but
U.S.-listed shares of Credit Suisse were down 52% on
Monday, while UBS Group shares were up 4.2%.
Major U.S. banks were flat to slightly higher in volatile
trading, with Morgan Stanley up 1.2%.
Regional bank First Republic Bank was down about 40%
following a downgrade by S&P Global and a report of more
fundraising that fanned worries about the bank's liquidity
despite a $30 billion rescue last week. Trading in shares of the
bank was halted several times due to volatility.
The Dow Jones Industrial Average rose 296.8 points,
or 0.93%, to 32,158.78, the S&P 500 gained 25.6 points,
or 0.65%, to 3,942.24 and the Nasdaq Composite added
21.31 points, or 0.18%, to 11,651.82.
Before the turmoil with the banks earlier this month, many
market participants had been factoring in a 50 basis-point
interest rate hike from the Federal Reserve at its March meeting
this week.
Fed funds futures as of Monday were showing a 26.9%
probability of the Fed holding its overnight rate at a current
4.5%-4.75% when policymakers conclude a two-day meeting on
Wednesday, according to CME's FedWatch Tool.
Among other regional banks, PacWest Bancorp was up
9.1% after the bank said deposit outflows had stabilized, while
New York Community Bancorp was up 24.1% after the
bank's unit agreed to buy deposits and loans from Signature
Bank.
The S&P Banking index was up 0.6% and the KBW Regional Banking index was up 1.7%.
Shares of Amazon.com were down 1.9% following the company's plans to slash another 9,000 jobs. Advancing issues outnumbered declining ones on the NYSE by a 1.67-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored advancers. The S&P 500 posted 1 new 52-week high and 8 new lows; the Nasdaq Composite recorded 24 new highs and 247 new lows.
(Reporting by Caroline Valetkevith in New York
Additional reporting by Shubham Batra, Amruta Khandekar and
Ankika Biswas in Bengaluru
Editing by Vinay Dwivedi and Matthew Lewis)
