Wall Street closed higher after a group of banks said it would bail out First Republic Bank amid a banking crisis.
Dow Jones Industrial AverageindexIt closed at 32,246.55, up 371.98 points or 1.17%. The S&P 500 closed up 68.35 points, or 1.76%, at 3960.28. The Nasdaq Composite rose 283.22 points, or 2.48%, to 11,717.28;investInvestors are buying technology stocks on hopes the crisis could prompt the Fed to change its monetary policy approach at next week’s meeting.
All three major indexes fell in early trade, and the Dow fell more than 300 points to its lowest ever. But optimism changed after reports of some banks depositing $30 billion with First Republic. The SPDR S&P Regional Banking ETF (KRE) climbed 3.52%, its best day since Nov. 10, while First Republic closed up 9.98%.
Markets were also boosted by Credit Suisse’s overnight announcement that it would borrow about $54 billion from the Swiss National Bank to secure short-term liquidity. Shares in the beleaguered lender tumbled on Friday after reports that Credit Suisse’s biggest shareholder, the National Bank of Saudi Arabia, said it would not provide additional aid.
in recent timesSilicon Valley BankInvestors have feared a contagion crisis in the banking sector following the closure of Bank of America and Signature Bank. While worries about the industry weighed on investors, all three major indexes were on track for gains this week. The Nasdaq is up 5.2% so far this week, led by gains in Tonglun.
“The market is saying, ‘The world might not end in the way that was envisioned not too long ago. It’s a real relief,'” said Bob Doll, chief investment officer at Crossmark Global Investments.
Global investors are also paying attention to the news that the European Central Bank has announced another 2 yards (50 basis points) rate hike.
US investors are preparing for the Fed policy meeting next week. Big tech companies like Amazon and Alphabet, which are known to be particularly sensitive to interest rates, along with other growth stocks, closed nearly 4%.
“The banking sector developments last week certainly added a layer of unease to investor sentiment,” said Greg Basuk, CEO of AXS Investments. “But ultimately, investors will be wondering: What does this mean for Fed policy and interest rates?”
Jay Hatfield, chief investment officer at Infrastructure Capital Management, said investors should consider big moves by next weekend.
He pointed to next week’s Fed policy meeting and the fact that the Federal Deposit Insurance Corporation (FDIC) always takes banks on Fridays as two reasons why investors should wait until the end of next week before adding to positions.
Investors should “wait to see what the next shoe drops, and then wait to see what the Fed actually intends to do,” he said.
However, Hatfield said he remains “extremely” bullish on the long-term investment outlook. He will hold on to his target of 4,500 points, which is equivalent to an increase of 15.6% from the closing price on the 15th.
Greg Fleming, CEO of Rockefeller Capital Management and former chairman of Morgan Stanley Wealth Management, said that as the crisis unfolds, investors are looking for the most vulnerable banks. “Similar to 2008, the market is looking for the next weak spot.” The representation is an uninsured deposit.”
William Martin, a short trader at Rocky Hill, New Jersey-based Raging Capital Ventures, has become the latest “Big Short” in the latest banking crisis triggered by the collapse of Silicon Valley Bank.
He specifically picked Silicon Valley Bank and posted on Twitter announcing his short position on January 18, the day before the bank’s earnings report. Martin warned that the Silicon Valley bank’s large portfolio of maturing securities and quick deposit outflows were to blame for the collapse of the venture-focused lender.
finance (tags to translate) investment