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Shares of regional, major U.S. banks jump
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Tesla surges on China sales data
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Indexes up: Dow 0.34%, S&P 0.69%, Nasdaq 1.00%
(New throughout, adds NEW YORK dateline, changes byline)
By Stephen Culp
NEW YORK, March 21 (Reuters) - Wall Street advanced on
Tuesday as widespread fears over liquidity in the banking sector
subsided and investors turned their focus to the Federal
Reserve, which has convened for its much-anticipated two-day
policy meeting
All three major U.S. stock indexes were resolutely green,
with smallcaps , energy and financials enjoying the most sizable gains.
A one-two punch of regional bank failures last week,
followed by the rescue of First Republic Bank and the
takeover of Credit Suisse , sparked a rout in banking
stocks and fueled worries of contagion in the financial sector
which, in turn, heightened global anxieties over the growing
possibility of recession.
But banking stocks bounced back on Tuesday, surging
3.6%, and building on Monday's reversal. Still, despite its
recent resurgence, the S&P Banks index has lost nearly 18% of
its value just this month.
Both the SPXBK and the KBW Regional Banking index have set a path for their biggest one-day percentage jumps in
months.
"It's a bit of a rebound from the sell-off associated with
issues surrounding the regional banks," said Robert Pavlik,
senior portfolio manager at Dakota Wealth in Fairfield,
Connecticut. "So much effort has been put into ending the
confidence crisis, by the FDIC, the Treasury and the Fed,
there’s a renewed interest in the stock market."
Treasury Secretary Janet Yellen, in prepared remarks before
the American Bankers Association, said the U.S. banking system
has stabilized due to decisive actions from regulators, but
warned more action might be required.
Attention now shifts to the Fed, which has gathered for its
two-day monetary policy meeting, at which the members of the
Federal Open Markets Committee (FOMC) will revisit their
economic projections and, in all likelihood, implement another
increase to the Fed funds target rate in their ongoing battle
against inflation.
"The Fed is in a no-win situation," Pavlik added. "The Fed
is doing their job by raising rates to battle inflation and they
need to continue to do that, but if they do it creates more of a
problem with banks that are teetering."
Financial markets have now priced in an 86.4% likelihood of
a 25 basis-point rate hike, and a 13.6% probability that the
central bank will leave its policy rate unchanged, according to
CME's FedWatch tool.
Economic data released early in the session showed a 14.5%
jump in existing home sales, blasting past expectations and
snapping a 12-month losing streak.
At 2:08 p.m. EDT, the Dow Jones Industrial Average rose 109.46 points, or 0.34%, to 32,354.04, the S&P 500 gained 27.39 points, or 0.69%, to 3,978.96 and the Nasdaq
Composite added 117.28 points, or 1%, to 11,792.82.
Among the 11 major sectors in the S&P 500, seven were in
positive territory, with energy and financials out front.
Shares of First Republic Bank surged 46.4%, setting
a course for their biggest-ever one-day percentage jump as
JPMorgan CEO Jamie Dimon leads talks with other big banks aimed
at investing in the lender, according to the Wall Street
Journal.
Peers PacWest Bancorp and Western Alliance Bancorp leaped by 16.8% and 16.8%, respectively.
Tesla Inc rose 6.7% after the electric automaker
appeared on track to report one of its best quarters in China,
according to car registration data.
Advancing issues outnumbered declining ones on the NYSE by a
3.01-to-1 ratio; on Nasdaq, a 2.52-to-1 ratio favored advancers.
The S&P 500 posted 5 new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 41 new highs and 89 new lows.
(Reporting by Stephen Culp in New York
Additional reporting by Shubham Batra, Amruta Khandekar and
Ankika Biswas in Bengaluru
Editing by Matthew Lewis)
