- Indices: Dow up 0.11%, S&P up 0.19%, Nasdaq down 0.18%
NEW YORK, March 24 (Reuters) – Wall Street rebounded from an earlier sell-off on Friday at the end of a turbulent week as Federal Reserve officials calmed investors’ jitters over a possible liquidity crisis in the banking sector.
While all three major US equity indices started the session significantly lower after a sell-off in European banks, those losses reversed in the early afternoon, repeating the intraday roller coaster ride of recent sessions.
The S&P 500 and the Dow were both slightly higher recently, while the Nasdaq remained in negative territory.
At the end of a turbulent week marked by the Fed raising interest rates and mounting concerns about the health of the banking system, all three are on track to post weekly gains.
“In recent weeks there has been additional volatility due to monetary policy stance and concerns over financial stability,” said Bill Northy, senior investment director at US Bank Wealth Management in Helena, Montana.
“Looking at the broader market, the most important impact has been the change in monetary policy,” added Northy. “In terms of the difference between policy expectations and what the Fed has outlined, this suggests a reconciliation will take place in the coming months.”
In separate appearances, three regional Fed bank governors said their confidence that the banking system was not facing a liquidity crisis led to the decision to implement a 25 basis point rate hike on Wednesday.
But while Fed officials continue to view further rate hikes as a strong possibility, financial markets are now pricing in an 87% chance of no rate hike at all by the end of their next monetary policy meeting in May.
Concerns about potential contagion beyond regional banks, which threatens to spread to their larger peers, were prompted by a sell-off in European banking stocks.
This sell-off was prompted by the rising cost of insuring Deutsche Bank’s debt, expressed through its credit default swaps hot on the heels of the state-sponsored takeover of Credit Suisse, and has fed into the narrative of industry-wide tensions.
U.S.-traded Deutsche Bank shares lost 3.3%.
But those worries abated in the afternoon
While the S&P Bank Index (.SPXBK) was only slightly lower recently, the KBW Regional Bank Index (.KRX) even gained 2.4%.
The SPXBK is down 22.3% so far in March, setting the stage for its biggest monthly slide in three years.
The Dow Jones Industrial Average (.DJI) was up 36.27 points, or 0.11%, to 32,141.52, the S&P 500 (.SPX) was up 6.86 points, or 0.17%, to 3,955.58 and the Nasdaq Composite (.IXIC) fell 21.04 points, or 0.18%, to 11,766.35.
Of the 11 major sectors in the S&P 500, consumer discretionary (.SPLRCD) fell the most, while defensive stocks led by utilities (.SPLRCU) rallied on the day.
Stocks of major US banks such as JPMorgan Chase & Co (JPM.N) and Wells Fargo (WFC.N) trimmed losses, while Bank of America (BAC.N) turned green.
Regional lenders First Republic Bank (FRC.N), PacWest Bancorp (PACW.O), Western Alliance Bancorp (WAL.N) and Truist Financial Corp (TFC.N) also reversed previous falls, most recently rising between 1% and 4% .5%.
Activision Blizzard (ATVI.O) rose 5.6% after the UK competition regulator dropped some competition concerns surrounding the deal between Microsoft and Activision.
Rising issues predominated on the NYSE at a 1.14 to 1 ratio; on the Nasdaq, a 1.09 to 1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 35 new lows; the Nasdaq Composite posted 26 new highs and 282 new lows.
Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Ankika Biswas in Bangalore Editing by Marguerita Choy
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