Regional Banks Gain Ground As S&P 500 Rises By 1%

A rebound in regional bank shares during Thursday's session on news that a closely followed bank could be offered support by a government program calmed investors amid the ongoing crisis as investors came to terms with potential support for this bank.

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There was a 1.2% gain in the broad index, despite the fact that at one time it was down by 0.7%. It is interesting to note that the Dow Jones Industrial Average added roughly 0.6%, after losing almost 300 points earlier in the session, after initially losing more than 300 points. Investors bought technology stocks on Wednesday, as the Nasdaq Composite advanced 1.9% on the expectation that, at the Federal Reserve's meeting next week, one of the consequences of the crisis will be to change the Federal Reserve's stance on monetary policy.

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There has been a report by Trade Algo that big banks, including JPMorgan Chase and Morgan Stanley, are negotiating to inject capital into First Republic Bank, which is having trouble. Among the sources cited by Trade Algo, it was suggested that a full takeover of the company might be feasible, but it was not regarded as likely.

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Following the news, the SPDR S&P Regional Banking ETF (KRE), one of the most popular regional banking ETFs, traded up 1.7% after trading down. As with First Republic Bank, its shares also traded off their lows today, but the shares lost more than 25% as of this writing, and the shares were halted due to volatility.

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Markets were also boosted overnight by an announcement from Credit Suisse that it would take out a short-term loan from the Swiss National Bank in order to guarantee short-term liquidity up to nearly $54 billion at a zero interest rate. Following reports that the Saudi National Bank, Credit Suisse's biggest investor, would not provide the bank with any additional assistance, the embattled bank fell to a record low on Wednesday as it acknowledged it will not provide any additional assistance. Shares of U.S. companies listed on U.S. stock exchanges gained 2% on Thursday.

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Thursday's moves follow a series of bank stock declines across the globe triggered by the news surrounding Credit Suisse, which also reverberated in U.S. markets on Wednesday. Since Silicon Valley Bank and Signature Bank closed their doors a few days ago, investors have been closely monitoring bank stocks to see if any contagion could spread to other banks.

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According to Greg Fleming, CEO and former president of Morgan Stanley Wealth Management and current CEO of Rockefeller Capital Management, speaking last Wednesday, "What's also similar to 2008 is the hunt for who's going to be the weakest next," he said. "And the proxy's been the uninsured deposits.".

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Aside from the announcement of the ECB's announcement of another rate hike of 50 basis points on Thursday, investors around the globe followed the announcement of a subsequent rate hike.

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In preparation for next week's Federal Reserve policy meeting, U.S. investors made the decision. There was a more than 3% increase in Amazon and Alphabet shares.

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According to Greg Bassuk, CEO of AXS Investments, recent developments in the banking sector have added another layer of uncertainty around investor confidence. However, investors are ultimately focusing on: What does that mean for Fed policy and interest rates? ”