Stocks close up on bank bounce, Fed takes focus

Reuters Videos
1 年前

STORY: Wall Street closed sharply higher on Tuesday as fears of a banking crisis abated, and investors turned their focus to the Federal Reserve.

The Dow gained 1%, the S&P 500 climbed 1.3% and the Nasdaq jumped 1.6%.

Much has changed since Fed policy makers last met: A one-two punch of regional bank failures, the rescue of First Republic Bank and the takeover of Credit Suisse.

Now, Fed Chair Jerome Powell and team will have to balance fears of more damage to the banking sector with their original mission—to defeat inflation.

And while markets have priced in an overwhelming likelihood of a 25 basis-point rate hike, Christian Ledoux, director of individual securities at CAPTRUST, says a pause in rate hikes should also be on the table.

“The reality is, is that the banking situation is actually disinflationary, as banks are going to be responding to this by loaning less and being a little bit more conservative. So that may play into the Fed's ability to pause, in the short run, and thus maybe is a catalyst for stocks to go higher."

Shares of First Republic saw their biggest-ever one-day percentage jump as JPMorgan Chase CEO Jamie Dimon led talks with other big banks aimed at investing in the lender.

Peers PacWest and Western Alliance also surged.

Yellen: "Our intervention was necessary to protect the broader U.S. banking system."

And Treasury Secretary Janet Yellen on Tuesday reiterated that U.S. banking system has stabilized, but warned more action from regulators might be needed.

And in other market news, Tesla jumped nearly 8% after it appeared on track to report one of its best quarters ever in China – likely thanks to having been the first electric vehicle maker in the country to cut its prices in order to defend its market share.