US bank stocks rebound after crash triggered by SVB collapse

US stocks rose on Tuesday while bonds fell. Municipal bank stocks led the rally after falling sharply in previous trading following the failure of Silicon Valley Bank.

The Wall Street benchmark S&P 500 Index closed 1.7% higher, while the tech-heavy Nasdaq Composite rose 2.1% after the latest data showed. US consumer price inflation The annualized rate slowed to 6% in February, in line with economists’ forecasts.

stricken Bank Stocks led the rally, with First Republic Bank’s shares up 63% before closing more than a quarter higher. Banks fell 62% on Monday.

The KBW Nasdaq Bank Composite Index rose 3.2%. U.S. regional banks plunged 12% on Monday, despite President Joe Biden’s promise that regulators would do “whatever it takes” to protect depositors. SVB’s Failure.

Neil Birrell, Chief Investment Officer at Premier Mitten Investors, said: “The contagion appears to be fairly limited as this issue was created by a bank with little to no risk management.” rice field. “The authorities are stepping in and doing the right thing, so I think the impact is not as bad as it seems.”

But rating agency Moody’s Investors Service on Tuesday downgraded its outlook for US banking from stable to negative, citing a “rapidly deteriorating business environment.”

Bond markets fell after a historic rise on Monday as investors bet on the central bank delaying its tightening plans. Yields on two-year U.S. Treasury bills, which track interest rate expectations and move inversely with prices, rose 0.2 points after recording his biggest one-day drop since 1987 on Monday, he said. was 4.23%.

Tuesday’s inflation rate comes after a string of data releases showing a still-hot US economy.

However, the SVB collapse and ensuing turmoil in the banking system will likely lead the US Federal Reserve (Fed) to opt for a smaller rate hike of a quarter percentage point later this month, or a tightening of monetary policy. The bets intensified that it was likely to completely suspend the Treasury cuts yields and provides some support to equities.

Following the latest inflation data, the market is pricing in a roughly 75% chance of a quarter-point rise at the Fed’s meeting ending March 22, and a 25% chance of no change. . Before the SVB collapsed last week, the investor thought a 0.5 point gain was the most likely outcome.

Federated Hermes senior economist Silvia Dall’Angelo said February’s consumer price report is “not likely to upset the Fed” ahead of next week’s Fed meeting.

“Following a stressful episode in financial markets following the SVB bank failure, financial stability is likely to rank as high as inflation in the Fed’s considerations,” D’Arangelo said. “The Fed will raise rates [0.25 percentage points] next week. “

European banks also stabilized on Tuesday. The European Stoxbank index rose 2.5% on Monday after he fell 6.7% amid fears of contagion from the SVB’s failure and that steps to strengthen the US financial system fall short of Europe. and closed the transaction.

The market returned to relative calm after shares of Japan’s big banks plunged early on Tuesday as investors reacted to a selloff on Wall Street the previous day. His TOPIX bank index in Japan fell his 7.4%, the worst day in over three years, while the TOPIX fell his 2.7%. Shares of MUFG, Mizuho and SMFG fell between 7.1% and 8.6%.

In the forex market, the Dollar Index, which measures the US dollar against six peer currencies, fell 0.1%.

International benchmark Brent crude fell 3.9% to just under $78 a barrel.

Additional reporting by Colby Smith of Washington

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US stocks rose on Tuesday while bonds fell. Municipal bank stocks led the rally after falling sharply in previous trading following the failure of Silicon Valley Bank.The Wall Street benchmark S&P 500 Index closed 1.7% higher, while the tech-heavy Nasdaq Composite rose 2.1% after the latest data showed. US consumer price inflation The annualized rate slowed to 6% in February, in line with economists’ forecasts.stricken Bank Stocks led the rally, with First Republic Bank’s shares up 63% before closing more than a quarter higher. Banks fell 62% on Monday. The KBW Nasdaq Bank Composite Index rose 3.2%. U.S. regional banks plunged 12% on Monday, despite President Joe Biden’s promise that regulators would do “whatever it takes” to protect depositors. SVB’s Failure.Neil Birrell, Chief Investment Officer at Premier Mitten Investors, said: “The contagion appears to be fairly limited as this issue was created by a bank with little to no risk management.” rice field. “The authorities are stepping in and doing the right thing, so I think the impact is not as bad as it seems.” But rating agency Moody’s Investors Service on Tuesday downgraded its outlook for US banking from stable to negative, citing a “rapidly deteriorating business environment.”Bond markets fell after a historic rise on Monday as investors bet on the central bank delaying its tightening plans. Yields on two-year U.S. Treasury bills, which track interest rate expectations and move inversely with prices, rose 0.2 points after recording his biggest one-day drop since 1987 on Monday, he said. was 4.23%. Tuesday’s inflation rate comes after a string of data releases showing a still-hot US economy. However, the SVB collapse and ensuing turmoil in the banking system will likely lead the US Federal Reserve (Fed) to opt for a smaller rate hike of a quarter percentage point later this month, or a tightening of monetary policy. The bets intensified that it was likely to completely suspend the Treasury cuts yields and provides some support to equities. Following the latest inflation data, the market is pricing in a roughly 75% chance of a quarter-point rise at the Fed’s meeting ending March 22, and a 25% chance of no change. . Before the SVB collapsed last week, the investor thought a 0.5 point gain was the most likely outcome.Federated Hermes senior economist Silvia Dall’Angelo said February’s consumer price report is “not likely to upset the Fed” ahead of next week’s Fed meeting. “Following a stressful episode in financial markets following the SVB bank failure, financial stability is likely to rank as high as inflation in the Fed’s considerations,” D’Arangelo said. “The Fed will raise rates [0.25 percentage points] next week. “European banks also stabilized on Tuesday. The European Stoxbank index rose 2.5% on Monday after he fell 6.7% amid fears of contagion from the SVB’s failure and that steps to strengthen the US financial system fall short of Europe. and closed the transaction. The market returned to relative calm after shares of Japan’s big banks plunged early on Tuesday as investors reacted to a selloff on Wall Street the previous day. His TOPIX bank index in Japan fell his 7.4%, the worst day in over three years, while the TOPIX fell his 2.7%. Shares of MUFG, Mizuho and SMFG fell between 7.1% and 8.6%. In the forex market, the Dollar Index, which measures the US dollar against six peer currencies, fell 0.1%. International benchmark Brent crude fell 3.9% to just under $78 a barrel.Additional reporting by Colby Smith of Washington

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https://www.ft.com/content/8a26a0fa-59a9-4b7c-a86c-38bfa1bcc047 US bank stocks rebound after crash triggered by SVB collapse

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