Day Traders Diary

3/16/23

The major averages rose sharply on Thursday as Wall Street grew increasingly optimistic after a group of banks said it would aid First Republic Bank amid the industry's crisis. The Dow Jones Industrial Average
 index added 371.98 points, or 1.17%, to close at 32,246.55 points. The S&P 500 gained 1.76% to close at 3,960.28. The Nasdaq Composite advanced 2.48% to 11,717.28, 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.

All three indexes traded down earlier in the session, with the Dow down more than 300 points at its lowest. But the market turned positive after CNBC's David Faber reported that a group of banks would deposit $30 billion in First Republic. The SPDR S&P Regional Banking ETF (KRE) ETF ended the session up 3.5% in its best day since Nov. 10, helped by a 10% gain in First Republic's shares.

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. U.S. shares of the embattled bank 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.

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. Despite concerns in the sector weighing on the minds of investors, all three indexes are on pace to end the week higher, led by the Nasdaq Composite with a 5.2% advance.

'The market is saying, 'Well, maybe the world's not gonna end like maybe people thought not that long ago,'" said Bob Doll, chief investment officer at Crossmark Global Investments. "It's just a sigh of relief."

Investors around the world also followed the announcement of a further rate hike of 50 basis points from the European Central Bank Thursday. The decision comes as U.S. investors ready for the Federal Reserve policy meeting next week. Big technology names Amazon and Alphabet — considered particularly sensitive to interest rates along with other growth stocks — each gained around 4% in Thursday's session.

"Over the last week, the developments in the banking sector certainly is adding another layer of skittishness around investor confidence," said Greg Bassuk, CEO of AXS Investments. "But ultimately, investors are tying that back to: What does it mean for Fed policy and interest rates?"