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Indexes: Dow up 0.11%, S&P up 0.19%, Nasdaq off 0.18%
(New throughout, adds NEW YORK dateline, changes byline)
By Stephen Culp
NEW YORK, March 24 (Reuters) - Wall Street bounced back
from an earlier sell-off on Friday at the end of a tumultuous
week as U.S. Federal Reserve officials calmed investor
skittishness over a potential liquidity crisis in the banking
sector.
While all three major U.S. stock indexes started the session
sharply lower on the heels of a sell-off among European banks,
those losses reversed by early afternoon, repeating the intraday
roller coaster ride of recent sessions.
The S&P 500 and the Dow were last modestly higher, while the
Nasdaq remained in negative territory.
At the conclusion of a tumultuous week, marked by a Fed
interest rate hike and mounting worries over the health of the
banking system, all three are on course to post weekly gains.
"The last several weeks have included additional volatility
due to the change in the path of monetary policy and concerns
around financial stability," said Bill Northy, senior investment
director at U.S. Bank Wealth Management in Helena, Montana.
"Looking at the broad market, the major impact has been the
shift in monetary policy," Northy added. "In terms of the
differential between expectations of policy and the what the fed
laid out indicates that there’s a reconciliation to occur in the
coming months."
In separate appearances, three regional Fed bank presidents
said that their confidence that the banking system was not
facing a liquidity crisis is what led to the decision to
implement a 25 basis point policy rate hike on Wednesday.
But while Fed officials continue to see additional rate hikes as a strong possibility, financial markets are now pricing in an 87% likelihood of a no hike at all at the conclusion of its next policy meeting in May. Worries over potential contagion beyond regional banks to threatens to spread to their larger peers was sparked by a sell-off of European bank shares. That selloff was prompted by the rising cost of insuring Deutsche Bank's debt, expressed by its credit default swaps, coming on the heels of the state-sponsored buyout of Credit Suisse, has fed into the narrative of sector-wide stress. U.S.-traded shares of Deutsche Bank were down 3.3%. But those worries eased by mid-afternoon While the S&P Bank index was last only modestly lower, the KBW Regional Bank index was actually up 2.4%. The SPXBK has plummeted 22.3% so far in March, setting a course for its biggest monthly slide in three years. The Dow Jones Industrial Average rose 36.27 points, or 0.11%, to 32,141.52, the S&P 500 gained 6.86 points, or 0.17%, to 3,955.58 and the Nasdaq Composite dropped 21.04 points, or 0.18%, to 11,766.35. Of the 11 major sectors in the S&P 500, consumer discretionary was down the most, while defensive stocks, led by utilities were up on the day. Shares of major U.S. banks such as JPMorgan Chase & Co , Wells Fargo pared their losses, while Bank of America flipped green.
Regional lenders First Republic Bank , PacWest
Bancorp , Western Alliance Bancorp and Truist
Financial Corp also reversed earlier dips, and were last
up between 1% to 4.5%.
Activision Blizzard jumped 5.6% after the UK
competition regulator dropped some competition concerns in the
Microsoft-Activision deal.
Advancing issues outnumbered declining ones on the NYSE by a
1.14-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 35 new lows;
the Nasdaq Composite recorded 26 new highs and 282 new lows.
(Reporting by Stephen Culp; Additional reporting by Amruta
Khandekar and Ankika Biswas in Bangalore
Editing by Marguerita Choy)
