by David Carnevali
NEW YORK (Reuters) – The New York Stock Exchange ended higher on Thursday, buoyed by a sharp rebound in the financial sector after news reports indicated that several major U.S. banks decided to bail out First Republic Bank, a new episode of the soap opera. which is shaking the banking sector.
The Dow Jones Industrial Average gained 1.17%, or 371.98 points, to 32,246.55 points.
The broader S&P-500 gained 68.35 points, or 1.76%, to 3,960.28 points.
The Nasdaq Composite advanced for its part by 283.23 points (2.48%) to 11,717.28 points.
This rebound comes in the wake of the decision of the European Central Bank (ECB) to raise its interest rates by 50 basis points, as it had promised, thus continuing to focus on the fight against inflation despite concerns about the stability of the global banking system.
Financial institutions, including JP Morgan Chase and Morgan Stanley, have confirmed that they will inject $30 billion into the coffers of First Republic Bank to stabilize it, as several media outlets reported during the day. including Reuters citing sources familiar with the matter.
Recalling the fall of Silicon Valley Bank and Signature Bank, the chief investment officer of Huntington Private Bank said the major institutions now wanted to “save what they see as a more mainstream bank”. “Banks look out for each other,” added John Augustine.
The prospect of First Republic Bank being rescued pushed its stock up 9.98%, while JP Morgan and Morgan Stanley also ended up 1.94% and 1.89% respectively.
Positive sentiment spread more broadly and benefited regional banks, including Alliance Bancorp which jumped 14.09% from declines earlier in the session.
Thus, the S&P-500 banking index rose by 2.16%.
Concerns about the US banking sector have shaken Wall Street in recent days, alert to a risk of contagion following the fall of Silicon Valley Bank.
Treasury Secretary Janet Yellen wanted to be reassuring for Americans and assured that the national banking system was stable.
Data released during the day show that weekly jobless claims in the United States declined more than expected, again highlighting the resilience of the job market, with the possible consequence of seeing the Federal Reserve (Fed) extend its rate hike policy.
However, markets are overwhelmingly betting on a 25 basis point rate hike after the Fed meeting next week, as weak monthly retail sales and decelerating producer prices have fueled that view. .
On the stock side, Meta Platforms, Facebook’s parent company, and Snap rose after the US administration threatened to sanction TikTok.
( Jean Terzian)
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