Wall St rallies as banks rebound, small bets on rate hike

  • February CPI in line with expectations
  • Regional banks rebound
  • Meta rises on more layoff plans
  • Indices up: Dow 1.33%, S&P 1.95%, Nasdaq 2.36%

March 14 (Reuters) – U.S. bank stocks rebounded on Tuesday, pushing major Wall Street indexes higher as a slight slowdown in consumer price growth prompted investors to expect a lower rate hike of the Federal Reserve in March.

The data showedU.S. The consumer price index (CPI) rose 0.4% in February, from 0.5% in January, as Americans face steadily higher costs for rent and food. On an annual basis, the CPI rose 6% in February, compared to 6.4% the previous month.

Excluding the volatile food and energy components, the CPI rose 0.5% after rising 0.4% in January. In the 12 months to February, the so-called core CPI rose 5.5% after rising 5.6% in January.

The yield on two-year Treasury bills, which best reflects interest rate expectations, rose to 4.3% after the data, with traders hanging on bets of a 25% rate hike. basis points in March.

The probability of a pause in rate hikes slipped to 17% in March.

Latest updates

See 2 more stories

Stocks have been hammered in recent days after the collapse of SVB Financial Group (SIVB.O) and its counterpart Signature Bank (SBNY.O) sent shockwaves through the banking sector.

Investors are now hoping that the Fed will ease its aggressive monetary policy to avoid a liquidity crisis.

“As the CPI continues its downward trend for the eighth consecutive month, it remains remarkably high by Fed standards,” said Charles Hepworth, chief investment officer at GAM Investments.

“Therefore, continued hawkish policy should always be justified, or at least that’s what the Fed is likely to want to say.”

Shares of regional banks rebounded after suffering double-digit losses in the past few days, with the KBW Regional Banking Index (.KRX) up 7.7%.

First Republic Bank (FRC.N) jumped 49.5%, while shares of fellow Western Alliance Bancorp (WAL.N) rose 40.7%. Trading in the shares of both banks has been halted several times due to volatility.

The S&P 500 Banking Index (.SPXBK) rose 2.9% after posting its biggest one-day percentage decline since June 2020 in the previous session.

Meta Platforms Inc (META.O) rose 6.1% after Facebook’s parent company said it would cut 10,000 jobs in a second round of mass layoffs.

Other big rate-sensitive growth stocks such as Apple (AAPL.O), Alphabet Inc (GOOGL.O) and Tesla (TSLA.O) rose between 1% and 4%.

As of 11:46 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 422.41 points, or 1.33%, at 32,241.55, the S&P 500 (.SPX) was up 75.20 points, or 1.95%, to 3,930.96, and the Nasdaq Composite (.IXIC) rose 263.75 points, or 2.36%, to 11,452.59.

Shares of Uber Technologies Inc (UBER.N) and Lyft Inc (LYFT.O) rose 5.6% and 3% respectively, after a California state court revived a ballot measure allowing app-based services to treat drivers as independent contractors rather than employees.

United Airlines Holdings Inc (UAL.O) fell 4.6% on a pessimistic forecast for the first quarter.

Advancing issues outnumbered declining issues with a ratio of 6.05 to 1 on the NYSE and 3.52 to 1 on the Nasdaq.

The S&P index recorded two new 52-week highs and five new lows, while the Nasdaq recorded 18 new highs and 79 new lows.

Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Additional reporting by Shashwat Chauhan, editing by Saumyadeb Chakrabarty, Uttaresh Venkateshwaran and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment