U.S. stocks moved higher Tuesday following U.S. and European efforts to stabilize the banking system.
The S&P 500 (^GSPC) climbed 1.3%, while the Dow Jones Industrial Average (^DJI) gained nearly 1%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) jumped 1.6%.
Bond yields are rising, “potentially indicating less of a recessionary impulse from the banking system,” according to the US Market Intelligence team at JPMorgan. The yield on the benchmark 10-year U.S. Treasury note rose 3.6% Tuesday. On the front end of the yield curve, two-year yields jumped to 4.2%.
The moves Tuesday came on the heels of the Federal Reserve’s all-important interest rate decision Wednesday. Its policy meeting kicked off Tuesday.
To stem the fallout from the turmoil in the banking sector, the U.S. government is exploring ways to guarantee all bank deposits, an effort that wouldn’t need Congress to pass a new law, Bloomberg reported. Treasury Secretary Janet Yellen said at an event Tuesday morning that the government could backstop more deposits if necessary for smaller lenders.
The Federal Reserve's policy-making committee will take center stage Wednesday. On the heels of the banking crisis, central bank officials face a tough decision of whether to raise interest rates again or take a pause amid the turmoil in the banking sector.
Prior to the Silicon Valley Bank fallout, policymakers were poised to hike rates by as much as 50 basis points following a flurry of data showing a resilient economy. But now many market participants forecast a smaller point increase — or none at all.
“Based on Powell’s recent hawkish shift in early March, the market is still giving the Fed room to hike 25bps at this upcoming meeting, but will not allow the Fed to get away with more tightening beyond that,” Victor Masotti, Director of Repo Trading at Clear Street, wrote in a statement.
The European Central Bank was confronted by a similar scenario on Thursday. As a result, the ECB raised interest rates by 50 basis points, saying it remains committed to dampening inflation while monitoring the turmoil in the banking sector.
“Our economists expect the Fed to follow the ECB’s lead and raise rates in line with expectations, do away with forward guidance, but signal a continued tightening bias,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Tuesday.
With Credit Suisse’s (CS) solvency no longer a major concern after the weekend's forced marriage between UBS (UBS) and Credit Suisse, US regional banks remain an area of focus. JPMorgan is reportedly leading talks with other banks about efforts to stabilize First Republic (FRC) after last week’s $30 billion deposit lifeline failed to restore confidence. Shares soared nearly 30% Tuesday after sinking 47% Monday.
Other regional bank stocks making gains Tuesday include PacWest Bancorp (PACW), Zions Bancorporation (ZION), Western Alliance Bancorporation (WAL), and Regions Financial (RF).
Big bank stocks also rebounded, including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C).
Here are other trending tickers on Yahoo Finance:
Amazon (AMZN): The company plans to make deeper cuts to its workforce, laying off 9,000 more employees in the coming weeks, CEO Andy Jassy announced in a memo to staff on Monday. The move comes after 18,000 workers were laid off earlier this year. Amazon stock was up nearly 3% Tuesday.
Digital World Acquisition Corp. (DWAC): Digital World Acquisition is a SPAC expected to merge with former President Donald Trump's Trump Media & Technology Group. The stock witnessed volatility after Trump said he expected to be arrested on Tuesday over alleged hush-money payments in 2016.
Tesla (TSLA): The EV maker's credit rating got a boost from Moody’s Investor Research as Tesla's credit outlook changed to stable. Shares rallied 8%.
On Holding AG (ONON): The sportswear company posted a better-than-expected earnings report with strong sales and margin expansion.
Outside of the Fed’s policy meeting, housing data out Tuesday showed that existing home sales jumped 14.5% to an annualized rate of 4.58 million, topping the 4.2 million expected by economists, according to Bloomberg data.
On the earnings calendar, results from Nike (NKE) and Darden Restaurants (DRI) are set to be released this week, providing an update on the state of the consumer.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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Related Quotes
These are the stocks moving after the bell on Tuesday, March 21.
The Fed's two-day policy meeting kicks off Tuesday with the central bank perhaps facing the most uncertain landscape in recent memory as rising interest rates stand in tension with a banking crisis that threatens economic growth.
Existing home sales rose in February as mortgage rates dropped.
(Bloomberg) — Asian shares rose and US equity futures were steady ahead of the Federal Reserve’s much-anticipated interest-rate decision later Wednesday.Most Read from BloombergBomb Threat Called In to New York Court Where Trump Hearing HeldUS Studies Ways to Insure All Bank Deposits If Crisis GrowsSVB’s Loans to Insiders Tripled to $219 Million Before It FailedBiden Stunts Growth in China for Chipmakers Getting US FundsSwiss Are On the Hook for $13,500 Each on Credit Suisse BailoutStocks climb
"Diversification is the key," Echo Huang, a financial advisor, said.
Prices: Crypto prices continue to remain flat as traders a traders await the FOMC's decision on interest rates. Insights: Monetary liquidity expectations are one driver moving crypto markets these days, though not in the way many think – even if easing is around the corner, liquidity is tight, argues CoinDesk columnist Noelle Acheson. Crypto markets are once again fairly flat as traders await the next release from the Federal Open Market Committee (FOMC).
Amazon's at a crossroads. After years of no-expense-spared growth, the company's slashing costs wherever it can, CFRA Research Senior Equity Analyst Arun Sundaram told Yahoo Finance Live on Tuesday.
The stock market could easily take another hit soon. The stock market has recovered from the depths of its bear market, defined as a 20% or greater drop from a previous high, which it hit in early 2022. To be sure, banks and bank-held assets have been getting bought up since the Silicon Valley Bank failure, adding liquidity—and stabilization—to the banking system.
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One of the largest investors of the Credit Suisse bonds that were wiped out in the UBS takeover of the troubled Swiss bank still believes in the value of the debt class and the "bail-in" system designed to save banks seen as too big to fail. Spectrum Asset Management Inc on Monday said it liquidated all its Credit Suisse positions during late market trading on Saturday before the contingent convertible debt, called CoCos among traders, were written down to zero in the UBS deal. Now banks in difficulty will be bailed in by the holders of CoCos, formerly known as Additional Tier 1 bonds (AT1).
The stock was trading at 7.9 times its fiscal 2023 earnings on Tuesday versus its historical five-year average of 10.7, data on FactSet shows.
(Bloomberg) — Companies piled into the US investment-grade bond market Tuesday ahead of the Federal Reserve’s next interest rate decision, after the market was shuttered for a week as banking turmoil swept the US and Europe. Most Read from BloombergBomb Threat Called In to New York Court Where Trump Hearing HeldUS Studies Ways to Insure All Bank Deposits If Crisis GrowsSVB’s Loans to Insiders Tripled to $219 Million Before It FailedBiden Stunts Growth in China for Chipmakers Getting US FundsSwi
The crisis of confidence in banks will soon enter its third quarter. This crisis of defiance, the most serious since the Great Financial Crisis of 2008 caused by subprime mortgages, gives no signs that it will calm down anytime soon. There's Silicon Valley Bank, the bank that started it all.
AT&T saw a positive improvement to its Relative Strength (RS) Rating on Tuesday, with an increase from 66 to 78. When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. See if AT&T can continue to show renewed price strength and hit that benchmark.
(Bloomberg) — Wall Street’s favorite volatility gauge tumbled as a rebound in stocks deepened, with a surge in banks and assurances from authorities easing concern the recent financial tumult would lead to a full-blown crisis.Most Read from BloombergBomb Threat Called In to New York Court Where Trump Hearing HeldUS Studies Ways to Insure All Bank Deposits If Crisis GrowsSVB’s Loans to Insiders Tripled to $219 Million Before It FailedBiden Stunts Growth in China for Chipmakers Getting US FundsSw
Today's Research Daily features new research reports on 16 major stocks, including Merck & Co., Inc. (MRK), Intel Corporation (INTC) and MercadoLibre, Inc. (MELI).
Just over $17 billion worth of Credit Suisse bonds, known as Additional Tier 1 or AT1, debt will be written down to zero on the orders of the Swiss regulator as part of a rescue merger with UBS. Under the deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in terms of who gets paid when a bank or company collapses, will receive $3.23 billion. AT1 bonds issued by other European banks fell sharply on Monday as the treatment of Credit Suisse AT1 bondholders highlighted the risks of investing in this type of debt.
On March 15, 2020, the U.S. Federal Reserve slashed its benchmark interest rate by 100 basis points to almost zero and committed to boosting its bond holdings by at least $700 billion. The global economy staggered and then limped, but markets soared. It also unleashed a wave of armchair virologists on Twitter to keep us up to date with every minutia of the COVID threat.
The Federal Reserve has become used to difficult interest-rate calls but the recent banking turmoil has made Wednesday’s decision one of the toughest yet. Just a couple of weeks ago, Fed officials were gearing up for another data-driven rate hike. Then Silicon Valley Bank collapsed.
Bitcoin held above US$28,000 on Wednesday morning in Asia amid a rebound in most top 10 non-stablecoin cryptocurrencies. XRP led the winners.