The S&P 500 rebounded Thursday, as a comeback in regional bank shares on news of potential support for a closely followed bank calmed investors amid the ongoing crisis.
The broad index gained 1% despite at one point trading down 0.7%. The Dow Jones Industrial Average index added 142 points, or 0.3%, after falling by more than 300 earlier in the session. The Nasdaq Composite advanced 1.1% as investors bought technology stocks on hopes that the crisis could push the Federal Reserve to shift its outlook on monetary policy at its meeting next week.
The Wall Street Journal reported that big banks including JPMorgan Chase and Morgan Stanley were in talks for a possible capital infusion to troubled First Republic Bank. A full takeover was possible, according to sources cited by The Journal, though that path was considered unlikely.
The SPDR S&P Regional Banking ETF (KRE) last traded up modestly following the news. First Republic Bank also traded off the lows of the day, but shares were still down more than 20% and got halted for volatility.
Also boosting markets was an announcement from Credit Suisse overnight that it will borrow up to nearly $54 billion from the Swiss National Bank to assure short-term liquidity. The embattled bank after it fell to a record low Wednesday following reports that the Saudi National Bank, Credit Suisse’s largest investor, said it would not provide additional assistance. U.S.-listed shares were higher by 2% on Thursday.
Thursday’s moves come after the news surrounding Credit Suisse sent other European banking stocks lower and reverberated in U.S. markets Wednesday. Investors have been closely watching bank stocks after the closures of Silicon Valley Bank and Signature Bank prompted concerns of contagion in the sector in recent days.
“What’s also similar to ’08 is the hunting in the market for who’s the most weak next,” said Greg Fleming, CEO of Rockefeller Capital Management and former president of Morgan Stanley Wealth Management, on CNBC’s
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