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Wall Street closed sharply higher on Tuesday for the second straight session. Investor mood was upbeat on expectations that the Fed would be slowing its pace of rate hikes at its March meeting. Regional banks staged a big comeback, aiding the outlook of the financial sector. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1%, or 316.02 points, to close at 32,560.6. Nineteen components of the 30-stock index ended in positive territory, one remained unchanged, while 10 ended in negative.
The S&P 500 added 1.3% or 51.3 points to close at 4,002.87. Eight of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Consumer Discretionary Select Sector SPDR (XLY) and the Financials Select Sector SPDR (XLF) gained 3.5%, 2.8% and 2.5%, respectively, while the Utilities Select Sector SPDR (XLU) dropped 2%.
The tech-heavy Nasdaq gained 1.6% or 184.57 points to finish at 11,860.11.
The fear-gauge CBOE Volatility Index (VIX) was down 11.5% to 21.38. A total of 11.8 billion shares were traded on Tuesday, lower than the last 20-session average of 12.6 billion. Advancers outnumbered decliners on the NYSE by a 3.22-to-1 ratio. On Nasdaq, a 2.73-to-1 ratio favored advancing issues.
Investors Expect a Quarter-Point Hike From the Fed
While the financial sector remains under a cloud of uncertainty, there is widespread consensus that the Federal Reserve would raise interest rates by 25 bps at the conclusion of its March FOMC meeting on Wednesday. This assumption follows constantly-changing rate expectations over the past two weeks, with market participants even bracing for a 50 bps increase at one point.
The general feeling is that even as the Fed remains steadfast in its war against inflation, it is taking cognizance of the pall cast over trade in recent weeks and trying to reassure investors of the flexibility in its approach. Trade got a boost on Tuesday as the notion persisted.
Regional Banks Continue to Stage a Comeback
Regional banks, too, logged the second straight session of gains. The SPDR Regional Banking ETF (KRE) advanced close to 6% on Tuesday, led by the very recently plummeting First Republic Bank , which surged 29.5%, carrying the sector on its shoulders.
The sector got a massive boost from the statement made by Treasury Secretary Janet Yellen, who promised further government assistance if the banking sector crisis deepened. In her speech at the American Bankers Association, the former Fed chair said authorities believe they have taken appropriate actions to stem liquidity problems in the sector but assure to do more if needed.
“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” Yellen said. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.” Shares of First Republic Bank skyrocketed on her comments, but also got a massive boost on reports that JPMorgan’s CEO Jamie Dimon was leading talks with other big banks intending to invest in the troubled lender.
Global oil prices rose more than 2% on Tuesday as concerns over the banking crisis got addressed over the session. Brent crude settled up $1.53, or 2.1%, at $75.32/barrel, while WTI crude closed up $1.69, or 2.5% to $69.33/barrel.
Economic Data
The National Association of Realtors reported that existing home sales increased to 4.6 million units in February, after 12 months of decline. The January number remained unchanged at 4 million.
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Stock Market News for Mar 22, 2023
Wall Street closed sharply higher on Tuesday for the second straight session. Investor mood was upbeat on expectations that the Fed would be slowing its pace of rate hikes at its March meeting. Regional banks staged a big comeback, aiding the outlook of the financial sector. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1%, or 316.02 points, to close at 32,560.6. Nineteen components of the 30-stock index ended in positive territory, one remained unchanged, while 10 ended in negative.
The S&P 500 added 1.3% or 51.3 points to close at 4,002.87. Eight of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Consumer Discretionary Select Sector SPDR (XLY) and the Financials Select Sector SPDR (XLF) gained 3.5%, 2.8% and 2.5%, respectively, while the Utilities Select Sector SPDR (XLU) dropped 2%.
The tech-heavy Nasdaq gained 1.6% or 184.57 points to finish at 11,860.11.
The fear-gauge CBOE Volatility Index (VIX) was down 11.5% to 21.38. A total of 11.8 billion shares were traded on Tuesday, lower than the last 20-session average of 12.6 billion. Advancers outnumbered decliners on the NYSE by a 3.22-to-1 ratio. On Nasdaq, a 2.73-to-1 ratio favored advancing issues.
Investors Expect a Quarter-Point Hike From the Fed
While the financial sector remains under a cloud of uncertainty, there is widespread consensus that the Federal Reserve would raise interest rates by 25 bps at the conclusion of its March FOMC meeting on Wednesday. This assumption follows constantly-changing rate expectations over the past two weeks, with market participants even bracing for a 50 bps increase at one point.
The general feeling is that even as the Fed remains steadfast in its war against inflation, it is taking cognizance of the pall cast over trade in recent weeks and trying to reassure investors of the flexibility in its approach. Trade got a boost on Tuesday as the notion persisted.
Regional Banks Continue to Stage a Comeback
Regional banks, too, logged the second straight session of gains. The SPDR Regional Banking ETF (KRE) advanced close to 6% on Tuesday, led by the very recently plummeting First Republic Bank , which surged 29.5%, carrying the sector on its shoulders.
The sector got a massive boost from the statement made by Treasury Secretary Janet Yellen, who promised further government assistance if the banking sector crisis deepened. In her speech at the American Bankers Association, the former Fed chair said authorities believe they have taken appropriate actions to stem liquidity problems in the sector but assure to do more if needed.
“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” Yellen said. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.” Shares of First Republic Bank skyrocketed on her comments, but also got a massive boost on reports that JPMorgan’s CEO Jamie Dimon was leading talks with other big banks intending to invest in the troubled lender.
Consequently, shares of Western Alliance Bancorporation (WAL - Free Report) jumped 15%. The bank carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Oil Prices Rise as Banking Fears Get Allayed
Global oil prices rose more than 2% on Tuesday as concerns over the banking crisis got addressed over the session. Brent crude settled up $1.53, or 2.1%, at $75.32/barrel, while WTI crude closed up $1.69, or 2.5% to $69.33/barrel.
Economic Data
The National Association of Realtors reported that existing home sales increased to 4.6 million units in February, after 12 months of decline. The January number remained unchanged at 4 million.