Wall Street closes higher as banks bounce and focus on Fed

According to preliminary data, the S&P 500 gained 1.29% to 4,002.41 points (Image: REUTERS/Brendan McDermid)

Wall Street closed sharply higher on Tuesday, as widespread fears over liquidity in the banking sector eased and market participants’ attention turned to the Federal Reservewhich is expected to conclude its two-day policy meeting on Wednesday with a 25 percentage point hike in its key interest rate. fees.

A double whammy of bankruptcies banks US regional banks last week, followed by First Republic Bank bailout and Swiss takeover Credit Suisse for the UBSsent banking stocks down and fueled financial sector contagion concerns which, in turn, heightened global anxiety about the growing possibility of a recession.

But banking stocks rebounded on Tuesday, advancing on the reversal that began on Monday. Still, the S&P Banks Index has lost more than 18% of its value this month alone.

Both the SPXBK and the KBW Regional Banking Index jumped -3.6% and 4.8% respectively – their biggest one-day percentage gains since the end of last year.

“The stock market is recognizing that the banking crisis wasn’t a crisis after all, and it was isolated to a handful of banks,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “Both the public and private sectors have shown that they are more than capable of supporting and strengthening weak institutions.”

Attention now turns to the Fed, which has met for its two-day policy meeting, where policymakers will revise their economic forecasts and, most likely, implement another rate hike.

“The Fed will raise interest rates by 25 basis points and the market won’t care,” added Pursche. “It will all be about (President Jerome) Powell’s statement on the economy and the inflationand if he manages to do a good job of convincing the public that bank noise” can be attributed to poor management on the part of some banks.

At the end of the day, financial markets were pricing in an 83.4% probability of a 25 basis point rate hike and a 16.6% probability that the central bank will leave its interest rate unchanged, according to the CME’s FedWatch tool.

O S&P 500 (SPX) rose 1.30% to 4,002.97 points. The technology index Nasdaq Composite (US100) rose 1.58% to 11,860.11 points. O Dow Jones Industrial Average (DJI) advanced 0.98% to 32,560.6 points.

(Updated at 6:30 pm)

Source: Moneytimes

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