Market ticks up, including beaten banks

Financial stocks investors peg as next exodus victims strengthen

A choppy day of trading on Wall Street ended with stocks mostly higher Monday, as battered banks showed more strength, at least for now.

The S&P 500 eked out a 0.2 percent gain after having been up by as much as 0.8 percent. Banks and energy stocks led the gainers in the benchmark index, outweighing losses in technology and communications companies.

The Dow Jones Industrial Average rose 0.6 percent, while the Nasdaq composite fell 0.5 percent, reflecting losses in Google parent Alphabet and other tech companies. Gainers outnumbered decliners on the New York Stock Exchange by nearly 3-1.

The S&P and Nasdaq are coming off two straight weekly gains, even as markets have been in turmoil following the second- and third-largest U.S. bank failures in history earlier this month. Investors have been hunting for which banks could be next to fall as the system creaks under the pressure of much higher interest rates.

Still, financial stocks were among the biggest gainers Monday. First Citizens’ stock soared 53.7 percent after it said it would buy most of Silicon Valley Bank, whose failure sparked the industry’s furor earlier this month.

Other banks that investors have highlighted as the next potential victims of a debilitating exodus of customers also strengthened.

First Republic Bank jumped 11.8 percent and Pacwest Bancorp rose

3.5 percent. Most of the focus in the U.S. has been on banks that are below the size of those that are seen as “too big to fail.”

A broader worry has been that all the weakness for banks could cause a pullback in lending to small and midsized businesses across the country. That in turn could lead to less hiring, less growth and a higher risk of a recession.

The Federal Reserve and other central banks announced their latest increases to interest rates in recent weeks as they fight inflation that’s still gripping worldwide. Higher rates can undercut inflation by slowing the economy, but they raise the risk of a recession.

The Fed has pulled its key overnight rate to a range of 4.75 percent to 5 percent, up from virtually zero at the start of last year. It indicated last week that the troubles in the banking system could end up acting like rate hikes on their own, by slowing lending.