On Wednesday, Wall Street indexes increased due to a decline in worries about stress in the banking sector, and growing hopes that the Federal Reserve would pause interest rate hikes, which lifted shares of tech and growth companies. The U.S. regulator-backed sale of failed lender Silicon Valley Bank’s assets and lack of fresh signs of trouble in the banking sector since the buyout deal has lessened concerns in the market about the banking system. Regional U.S. bank stocks including Truist Financial Corp, Western Alliance Bancorp, and First Republic Bank rose between 1.6% and 7.1%, while larger peers Bank of America, Goldman Sachs, and JPMorgan Chase & Co rose between 0.1% and 1.1%. Rick Meckler, partner at Cherry Lane Investments, stated that “markets have been hit by waves of bad news, and we have hit a small pocket of stability with a few decent earnings and the bank crisis seeming closer to being over.”
The banking turmoil, which began in March with the collapse of Silicon Valley Bank, has led markets to reprice expectations of future monetary tightening by the Federal Reserve. Traders’ bets are now tilted towards no rate hike by the Fed in May, with odds of a 25-basis-point increase at 41%, according to CME Group’s Fedwatch tool. The increasing expectations of a pause boosted both Amazon.com Inc and Tesla Inc shares by about 3%, lifting consumer discretionary up about 1.5%. The information technology index also increased due to tech majors Apple Inc, Microsoft Corp, and Nvidia Corp rising between 1.3% and 2.3%. Thanks to gains in major technology and growth stocks, the Nasdaq outperformed its peers, while real estate stocks also advanced 1.8% to lead sectoral gains.
Michael Barr, the Fed’s vice chairman for supervision, will testify before Congress for a second day after he criticized Silicon Valley Bank’s risk management on Tuesday. A key inflation reading expected at the end of the week will provide more clues on the Fed’s monetary tightening plans. The CBOE volatility index, known as Wall Street’s fear gauge, fell to its lowest since March 9, reflecting easing investor anxiety.
At 9:44 a.m. ET, the Dow Jones Industrial Average was up 244.04 points, or 0.75%, at 32,638.29, the S&P 500 was up 42.12 points, or 1.06%, at 4,013.39, and the Nasdaq Composite was up 162.06 points, or 1.38%, at 11,878.14. Among major stock moves, Micron Technology Inc advanced 7.3% after the chipmaker forecast a boost to sales in 2025 from artificial intelligence. Lululemon Athletica Inc jumped 15.2% after forecasting annual sales and profit above estimates, while Lucid Group Inc gained 2.0% on plans to lay off about 18% of its workforce. U.S.-listed shares of Alibaba Group Holding Ltd slipped 1.5%, a day after touching a more than one-month high on the internet giant’s revamp and listing plans. Lucid Group Inc gained 1.4% on plans to lay off about 18% of its workforce. Advancing issues outnumbered decliners by a 5.60-to-1 ratio on the NYSE and 3.07-to-1 ratio on the Nasdaq. The S&P index recorded six new 52-week highs and no new low, while the Nasdaq recorded 32 new highs and 41 new lows.
