Stocks opened lower Thursday before reversing course mid-morning and rallying into the close.
Sparking the turnaround were reports that several of the country's largest banks – including blue chip stocks JPMorgan Chase (JPM) and Bank of America (BAC) – will provide beaten-down regional lender First Republic Bank (FRC) with a massive injection of deposits. Also lifting sentiment was news that Swiss National Bank offered a lifeline to Credit Suisse (CS).
It's been a chaotic week in the financial sector sparked by weekend headlines surrounding the failures of Silicon Valley Bank and Signature Bank. While this has created substantial volatility among bank stocks, the broader market has been fairly resilient. Still, today's positive headlines allowed investors to breathe a sigh of relief that the disruption could be contained.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As a result, the Nasdaq Composite jumped 2.5% to 11,717, the S&P 500 soared 1.8% to 3,960, and the Dow Jones Industrial Average gained 1.2% to 32,246.
All but one sector – real estate (unchanged) – finished higher, with technology (+2.8%) and communications services (+2.2%) leading the way. Financials (+1.9%) were another solid gainer, thanks to strong price action seen across the sector.
FRC stock, for one, was down more than 36% at its session low before ending the day up 10.3%. Boosting the volatile bank stock was news that JPM, BAC, Wells Fargo (WFC) and Citigroup (C) will deposit $5 billion apiece into First Republic. Several other banks will reportedly commit smaller amounts to the rescue effort.
Elsewhere, CS stock was up 18% at its session high after the bank secured a $50 billion loan from Swiss National Bank in what it called "decisive action to pre-emptively strengthen its liquidity." Shares ended the day down 0.2%, though. Anxiety around the strength of the Swiss bank – sparked in part by the recent closures of SVB and Signature Bank – sent its shares tumbling on Wednesday.
Is tech the new safety play?
Are tech stocks the new safety plays? Tech and tech-related sectors like communications services have shown relative strength throughout the first quarter. Looking at the numbers, the tech-heavy Nasdaq is up more than 11% for the year-to-date vs a roughly 3% gain for the broader S&P 500 and a 3% decline for the blue-chip Dow.
There are two potential reasons for the outperformance, says Carrie King, global deputy chief investment officer of BlackRock Fundamental Equities. One is possible bargain hunting after a significant underperformance from tech and tech-related stocks last year. Another is the notable cost-cutting that's been underway, including massive layoffs.
For investors looking to play the hot hand of the market, there are plenty of ideas, including those found among the best tech stocks and the best communication services stocks. As for industry-specific opportunities, these are the best semiconductor stocks and the best AI stocks to buy now.
-
How Lower Interest Rates Affect Your Finances: Credit Cards, Car Loans and MortgagesThe Fed's rate cut will provide relief for some borrowers, but savers will have to work harder to get decent returns.
-
Four Ways to Maximize Your 401(k) Contributions Before the Year EndsTo maximize your 410(k) contributions in 2024, assess how much you’ve contributed so far, check your employer’s match, take a look at your budget and consider increasing how much you set aside per paycheck.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
Stock Market Today: Nasdaq Jumps Ahead of Nvidia EarningsIt was a mostly positive start to a new week of pricing in more Donald Trump.
-
Stock Market Today: Stocks Drop as Post-Election Party EndsIt was a red finish on Wall Street Friday with tech stocks selling off ahead of Nvidia's upcoming earnings event.
-
Stock Market Today: Stocks Slip After Powell Talks Rate CutsThe main indexes closed lower Thursday after Fed Chair Powell said there's no rush to cut rates.
-
Stock Market Today: Markets Waver as Inflation Continues to EaseStocks gave up early gains as waning consumer price inflation leaves rate-cut bets essentially unchanged.
-
Stock Market Today: Stocks Retreat on Renewed Inflation, Interest Rate QuestionsStocks were lower and yields were higher on Tuesday, with markets reflecting the uncertain transition from campaign promises to real-world policies.
-
Stock Market Today: S&P 500 Tops 6K as Election Rally EnduresThe S&P 500 closed just below the 6,000 mark on Monday.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
