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Wall Street closed sharply higher on Monday, paring some of last session’s losses. Investor mood was uplifted as the crisis in the banking sector was combated by a forced takeover of Credit Suisse by UBS. Regional banks also rebounded from last week’s free fall. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.2%, or 382.6 points, to close at 32,244.58. Twenty-eight components of the 30-stock index ended in positive territory, while two ended in negative.
The S&P 500 added 0.9% or 34.93 points to close at 3,951.57. All 11 broad sectors of the benchmark index ended in positive territory. The Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) gained 2.1%, 2% and 1.4%, respectively.
The tech-heavy Nasdaq gained 0.4% or 45.03 points to finish at 11,675.54.
The fear-gauge CBOE Volatility Index (VIX) was down 5.3% to 24.15. A total of 12.5 billion shares were traded on Monday, lower than the last 20-session average of 12.6 billion. Advancers outnumbered decliners on the NYSE by a 1.69-to-1 ratio. On Nasdaq, a 1.05-to-1 ratio favored advancing issues.
UBS Takeover of Credit Suisse Sparks Market Rebound
The woes faced by Credit Suisse Group AG , one of the world's largest financial institutions, raised fears of a new financial crisis and dominated trade throughout last week. The bank was on the verge of liquidity last week until it was thrown a lifeline by its own central bank. Once considered one of the 30 global institutions too big to fail, the Swiss banking giant has been on a slide for the better part of the last two years, and needed the Swiss National Bank, the Swiss government and other regulatory authorities to come up with a rescue plan.
The deliverance was provided by UBS Group AG (UBS - Free Report) , with a buy-out plan of $3.23 billion, in a move that establishes its position as the leading bank in Switzerland, and one of the largest banks in Europe.
UBS Chairman Colm Kelleher said in a statement, “We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses.”
Market participants believe that this last-minute rescue which is backed by a massive government guarantee, has helped prevent what would have been one of the largest banking collapses since the Lehman Brothers’ fiasco in 2008. The mood was upbeat in the markets and the financial stocks staged a comeback.
Tremors felt in the global financial markets also meant that investors are currently focused on the Fed's decision policy decision at the end of a two-day meeting on Wednesday. Before the bank crisis hit, market participants had been pricing in a 50-basis-point interest rate hike from the meeting. Now, a 25-basis-point hike seems to be the more likely outcome.
Regional banks, too, rebounded from last week’s losses. The SPDR Regional Banking ETF (KRE) advanced 1% on Monday, having plummeted 14% last week. It had, in fact, risen 5% at one point in the session, before First Republic Bank , with a 47.1% decimation, weighed down heavily on the sector.
Global oil prices rebounded and rose more than 1% on Monday after hitting their lowest levels in 15 months on recession fears that stemmed from the ongoing banking crisis. Brent crude rose $0.82, or 1.1% to $73.79/barrel. WTI crude gained $0.90, or 1.4%, to close at $67.64/barrel.
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Stock Market News for Mar 21, 2023
Wall Street closed sharply higher on Monday, paring some of last session’s losses. Investor mood was uplifted as the crisis in the banking sector was combated by a forced takeover of Credit Suisse by UBS. Regional banks also rebounded from last week’s free fall. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.2%, or 382.6 points, to close at 32,244.58. Twenty-eight components of the 30-stock index ended in positive territory, while two ended in negative.
The S&P 500 added 0.9% or 34.93 points to close at 3,951.57. All 11 broad sectors of the benchmark index ended in positive territory. The Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) gained 2.1%, 2% and 1.4%, respectively.
The tech-heavy Nasdaq gained 0.4% or 45.03 points to finish at 11,675.54.
The fear-gauge CBOE Volatility Index (VIX) was down 5.3% to 24.15. A total of 12.5 billion shares were traded on Monday, lower than the last 20-session average of 12.6 billion. Advancers outnumbered decliners on the NYSE by a 1.69-to-1 ratio. On Nasdaq, a 1.05-to-1 ratio favored advancing issues.
UBS Takeover of Credit Suisse Sparks Market Rebound
The woes faced by Credit Suisse Group AG , one of the world's largest financial institutions, raised fears of a new financial crisis and dominated trade throughout last week. The bank was on the verge of liquidity last week until it was thrown a lifeline by its own central bank. Once considered one of the 30 global institutions too big to fail, the Swiss banking giant has been on a slide for the better part of the last two years, and needed the Swiss National Bank, the Swiss government and other regulatory authorities to come up with a rescue plan.
The deliverance was provided by UBS Group AG (UBS - Free Report) , with a buy-out plan of $3.23 billion, in a move that establishes its position as the leading bank in Switzerland, and one of the largest banks in Europe.
UBS Chairman Colm Kelleher said in a statement, “We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses.”
Market participants believe that this last-minute rescue which is backed by a massive government guarantee, has helped prevent what would have been one of the largest banking collapses since the Lehman Brothers’ fiasco in 2008. The mood was upbeat in the markets and the financial stocks staged a comeback.
Tremors felt in the global financial markets also meant that investors are currently focused on the Fed's decision policy decision at the end of a two-day meeting on Wednesday. Before the bank crisis hit, market participants had been pricing in a 50-basis-point interest rate hike from the meeting. Now, a 25-basis-point hike seems to be the more likely outcome.
Regional banks, too, rebounded from last week’s losses. The SPDR Regional Banking ETF (KRE) advanced 1% on Monday, having plummeted 14% last week. It had, in fact, risen 5% at one point in the session, before First Republic Bank , with a 47.1% decimation, weighed down heavily on the sector.
Consequently, shares of PacWest Bancorp and Fifth Third Bancorp (FITB - Free Report) jumped 10.8% and 5.1%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Oil Prices Rebound From 2021 Low
Global oil prices rebounded and rose more than 1% on Monday after hitting their lowest levels in 15 months on recession fears that stemmed from the ongoing banking crisis. Brent crude rose $0.82, or 1.1% to $73.79/barrel. WTI crude gained $0.90, or 1.4%, to close at $67.64/barrel.