The Dow Jones index advanced 0.98% to 32,560.60 points, the tech-heavy Nasdaq climbed 1.58% to 11,860.11 points and the S&P 500 1.30% to 4,002.87 points.
Investors seemed encouraged by Treasury Secretary Janet Yellen’s remarks to the American Bankers Association (ABA).
“The situation is stabilizing. And the American banking system remains solid,” said Joe Biden’s Minister of Economy and Finance. “Actions similar” to the rapid lending to banks following the collapse of Silicon Valley Bank and Signature Bank “might be warranted if smaller institutions experience withdrawal rushes that pose a risk of contagion,” she said.
“US authorities are exploring ways to temporarily extend FDIC (banking regulator) coverage of deposits beyond the current cap of $250,000,” said Art Hogan of B. Riley Wealth Management.
For Steve Sosnick, chief strategist at Interactive Brokers, “the banking problems have passed into the background”: “it may be a little early to say that we are completely out of the woods, but we have not heard of new issues at a bank this week and that’s good news for the market.”
The banking sector (+2.47%), together with the energy sector, led the rise in the market.
The American bank First Republic, still rolled on Wall Street on Monday despite the lifelines launched by the authorities and competing establishments, soared by almost 30% to 15.78 dollars following having dropped 47% the day before.
Among other regional establishments, Fifth Third gained 4.50%, Western Alliance Bancorporation 14.96% and PacWest Bancorp 18.77%.
Investors mainly had their eyes turned to the American Central Bank (Fed) which ends a meeting on Wednesday with, to comment on its monetary decision, a press conference by its president Jerome Powell and new economic forecasts and projections of rate changes. .
“It’s not very clear on the Fed, although the consensus is for a 25 basis point rate hike,” which should take them between 4.75% and 5%, Steve said. Sosnick.
The banking turbulence partly caused by the drastic rise in rates over the past year will indeed weigh in the discussions of the Monetary Committee.
The key will be “in the press conference, where the president will ensure that there is not really a banking crisis”, added the analyst.
The projection tables for rate changes will also be watched closely, as the market is now anticipating rate cuts starting in the summer.
In another register, Tesla’s stock jumped 7.82%, while Elon Musk’s group was given a better debt rating by Moody’s.
Further cost cutting with the loss of 9,000 new jobs at Amazon was well received by investors, the stock rose 2.97%.
The very volatile action of the GameStop video game distribution group soared following the closure (+31%), following the announcement of profits above forecasts in the fourth quarter once morest a loss a year earlier.
