Stocks rally after battered First Republic gets a lifeline

Stocks rebounded on Thursday after a group of big banks offered a lifeline to the bank that investors had zeroed in on in their hunt for the industry’s next victim.

The S&P 500 jumped 1.8% for its best day in nearly two months after 11 of the biggest banks said they would deposit a combined $30 billion into First Republic Bank.

This week has been a whirlwind for markets globally on worries that banks might be bending under the weight of the fastest set of hikes to interest rates in decades. The concerns have been flaring since Friday’s collapse of Silicon Valley Bank, which was the second-largest bank failure in U.S. history.

Since then, Wall Street has tried to root out banks with similar traits, such as having many depositors with more than the $250,000 limit that’s insured by the Federal Deposit Insurance Corp.

First Republic Bank has been at the center of the market’s swivels, and it rose 10% Thursday after slumping as much as 36% early in the day. The group of 11 banks said the move “reflects their confidence in First Republic and in banks of all sizes.”

Across the Atlantic, European stocks rose after the European Central Bank announced a hefty increase to interest rates. Concerns there were also easing about another bank, Credit Suisse, which helped cause markets to tumble sharply Wednesday. The Swiss bank has been battling troubles for years, but its plunge to a record low raised concerns just as more attention was shining on the wider industry.

Credit Suisse’s stock in Switzerland leaped 19.2% Thursday after it said it will strengthen its finances by borrowing up to $54 billion from the Swiss National Bank.

The S&P 500 rose 68.35 points (1.8%) to 3,960.28. The Dow Jones Industrial Average gained 371.98 (1.2%) to 32,246.55. The Nasdaq climbed 283.22 (2.5%) to 11,717.28. The Russell 2000 picked up 25.29 (1.4%) to 1,771.24.