First Republic Gets A Lifeline, Sending Stocks Higher

Following JPMorgan Chase's rescue of struggling First Republic Bank, stocks closed higher on Thursday.

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A rebound of 372 points, or 1.2%, was recorded by the Dow Jones Industrial Average, a gain of 1.8% by the S&P 500, and a gain of 2.5% by the Nasdaq Composite.

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OANDA's senior analyst Edward Moya writes that the banking jitters are fading quickly, which is causing people to return to riskier assets.

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In a $30 billion agreement with First Republic Banking Corporation, Bank of America, JPMorgan Chase, and Citigroup, among others, have made uninsured deposits totaling $30 billion.

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First Republic shares (FRC) rose 10% Thursday after falling 21% in Wednesday's session following this news. The S&P Regional Banking ETF (KRE) also rose 3.5% following this news.

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While the shares of Credit Suisse (CS) plunged to all-time lows on Wednesday after its top shareholder said it would not invest any more money, the Swiss central bank announced it would lend up to 50 billion Swiss francs (about $54 billion). The Swiss share price of Credit Suisse rose 19.2%, while the American depositary receipt price remained unchanged.

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A potential tightening of lending by small and medium-sized banks was cited by Goldman Sachs as a reason for its lower U.S. growth forecast.

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As market watchers adjust their expectations for the future course of monetary policy, they're concerned about the impact of higher interest rates on the banking sector. It has been well established that the Federal Reserve has established a track record of continuously raising interest rates among other things in order to curb inflation; however, investors were prompted to question whether the Fed's work had been completed today following a flurry of economic meltdowns.

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According to Trade Algo data, the Fed Funds futures market predicts that there is a 61.9% chance that the Fed will raise interest rates by 25 basis points at its March 22 meeting. In terms of probability, there is an 18.1% chance that there will be no hike.

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There was a half-point rise in interest rates among European Central Bank members last Thursday at their monetary policy meeting, following a half-point rise in February at their previous meeting.

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“Taking futures probability into account, I believe the Fed will raise rates 25 basis points, while emphasizing that the banking system remains stable," writes Quincy Krosby, chief global strategist at LPL Financial.

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“In the event of further deterioration within the regional banks, or another blowup, the Fed may consider taking a pause," Krosby explained.

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Compared to the revised 212,000 claims reported the previous week, the initial jobless claims for the week ended March 11 fell to 192,000, according to the Labor Department.

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Census Bureau and Department of Housing and Urban Development said Thursday that the number of housing starts rose 9.8% in February from a month earlier to a seasonally adjusted annual rate of about 1.45 million, which is a far sharper gain than the 0.45% gain economists were expecting.

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Investing in equity index futures and stock index options will end on the same trading day on Friday, which is one of the four days a year when the expiration of each of these contracts coincides with the expiration of stock options.

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Dow Jones Market Data shows that, historically, market performance on triple-witching days has not been strong. The Dow Jones has fallen by an average of 0.65% on triple-witching days, the S&P has declined by an average of 0.59%, and the Nasdaq has fallen by an average of 0.40 percent.