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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
-
Dow Soars 493 Points in Fed-Fueled Bounce: Stock Market TodayNew York Fed President John Williams struck a dovish tone Friday, which eased Wall Street's worries over a potential December pause.
-
Dow Erases 717-Point Gain to End Lower: Stock Market TodayThe main indexes started the day with solid gains, but worries of an AI bubble weighed on stocks into the close.
-
S&P 500 Snaps Losing Streak Ahead of Nvidia Earnings: Stock Market TodayThe Dow Jones Industrial Average also closed higher for the first time in five days, while the Nasdaq Composite notched a win too.
-
Dow Trims Its Loss to 498 Points: Stock Market TodayMarkets are wondering more and more about returns on the enormous amounts of capital hyperscalers are investing in AI.
-
Dow Falls 557 Points to Start NVDA Week: Stock Market TodayThe Oracle of Omaha saw growth and value in certain corners of the stock market during the third quarter.
-
Investors Buy the Nasdaq's Big Dip: Stock Market TodayStocks are up and down again to end an up-and-down week ahead of big earnings announcements and the eventual return of regular economic data flow.
-
Dow Dives 797 Points as Government Opens: Stock Market TodayThe process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
Dow Climbs 327 Points, Crosses 48,000: Stock Market TodayMarkets are pricing the end of the longest government shutdown in history – and another solid set of quarterly earnings.
