4:15pm: Fed decision in focus
US stocks finished Tuesday higher boosted by a recovery in regional bank stocks, with all eyes now turning to the Federal Reserve's interest rate decision tomorrow.
The Dow Jones closed up 1% at 32,560 points, the S&P 500 added 1.3% at 4,002 points, and the Nasdaq Composite gained 1.6% at 11,860 points.
12:05pm: Treasury Secretary’s words boost regional bank stocks
US stocks were higher in noon trading after Treasury Secretary Janet Yellen said the government is ready to provide further guarantees of deposits if the banking crisis worsens.
At midday, the Dow gained 133 points to 32,377, while the S&P 500 added 23 points at 3,975 and the tech-heavy Nasdaq rose 71 points to 11,747.
“The game has changed a little bit here just in the past month with the banking situation that we that we’re currently facing, so I think that’s one of the things that [the Fed has] to consider,” Commonwealth Financial Network head of investment management Brian Price said.
Notable movers included shares of First Republic Bank, which soared more than 35% after the Wall Street Journal reported that JPMorgan Chase CEO Jamie Dimon is leading discussions with other bank chiefs about a rescue plan for the bank.
10:08am: Regional banks get a boost
A little after the opening bell, the Dow was up 293 points, 0.9%, to 32,537, the Nasdaq Composite added 136 points, 1.2%, to 11,811 and the S&P 500 43 points, 1.1%, to 3,995.
"Stock markets are bouncing back on Tuesday as some calm returns following the UBS takeover of Credit Suisse and traders look ahead to the Fed tomorrow," said Craig Erlam, senior market Analyst UK & EMEA at OANDA. "It's been a wild couple of weeks and while I, along with everyone else, am hopeful that the worst is behind us, I can't say I'm particularly confident. The response to recent events has been impressive from central banks, regulators, and governments, and while we can commend them for their firefighting skills, only time will tell if they've been successful in extinguishing the flames.
Regional banks were lifted by comments from Treasury Secretary Janet Yellen Tuesday morning, suggesting that the government is would provide further guarantees of deposits if the banking crisis worsens.
First Republic Bank shares gained about 33% to $16.18.
7:30am: Fed meeting in focus
Wall Street is expected to open higher on Tuesday as volatility in the banking sector dissipates and investors look to the Federal Reserve’s two-day rate-setting meeting starting today for further direction.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.8% in pre-market trading while those for the broader S&P 500 index gained 0.7%, and contracts for the Nasdaq-100 added 0.4%.
US stocks finished Monday in positive territory as regional banks rebounded on the news UBS would be buying troubled Swiss lender Credit Suisse. At the close, the DJIA had added 1.2% to 32,245, the S&P 500 was up 0.9% at 3,952 points, and the Nasdaq Composite gained 0.4% at 11,676 points.
“The clouds are parting and glimpses of blue sky are giving hope to investors after a chaotic few weeks. With no new troubles in the banking sector for the past 24 hours, markets are hoping that’s a sign the crisis could have peaked,” commented Russ Mould, investment director at AJ Bell. “The key question is whether this is the calm before the storm."
"The Federal Reserve’s next interest rate decision tomorrow still has the potential to kick up a fuss if the market thinks it is being too aggressive with rate rises," Mould added. "Investors’ nerves are already frail, and it wouldn’t take much to disturb the peace on the markets seen today.”
Markets are pricing in around a 70% chance of a 25 basis point US rate hike on Wednesday with a 30% chance of no change in what is shaping up to be one of the most uncertain decisions of the current rate hiking cycle, noted Victoria Scholar, head of investment at interactive investor.
“Monetary policymakers are weighing up the extent of the lingering inflationary pressures versus the potential deflationary impact of the banking crisis following SVB’s collapse and Credit Suisse’s takeover,” Scholar said. “The US dollar is languishing near five-week lows, reflecting the uncertainty around this week’s Fed decision.