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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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Other regional bank shares higher
(Adds analyst comment, updates to close)
By Caroline Valetkevitch
NEW YORK, March 20 (Reuters) - U.S. stocks ended higher
on Monday after a deal to rescue Credit Suisse and central bank
efforts to bolster confidence in the financial system relieved
investors, while participants 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.
Also, major central banks moved on Sunday to bolster the
flow of cash around the world.
The S&P Banking index and the KBW Regional Banking
index were higher following sharp losses last week. The
collapse of Silicon Valley Bank and Signature Bank shook markets earlier this month.
"In today's price action, you see the market containing
those banks, so it's not spreading. On top of it, we're seeing a
risk off in the market," said Quincy Krosby, chief global
strategist at LPL Financial in Charlotte, North Carolina.
All of the major S&P 500 sectors were higher.
Among other regional banks, PacWest Bancorp was up after the bank said deposit outflows had stabilized, while New York Community Bancorp climbed after the bank's unit agreed to buy deposits and loans from Signature Bank. "Where it is another bank coming in, that is the kind of headline that helps underpin confidence in the banking system," Krosby said. "It helps to halt the panic and fear." According to preliminary data, the S&P 500 gained 34.19 points, or 0.87%, to end at 3,950.83 points, while the Nasdaq Composite gained 45.09 points, or 0.39%, to 11,675.60. The Dow Jones Industrial Average rose 380.95 points, or 1.20%, to 32,242.93. The Credit Suisse takeover helped the market, but U.S.-listed shares of Credit Suisse were down sharply on Monday, while UBS Group shares were up. Regional bank First Republic Bank also was down sharply 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. Investors are also focused on this week's Fed decision. 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 Fed 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. Shares of Amazon.com were down following the company's plans to slash another 9,000 jobs. (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)
