Stocks rise despite worries over banks
Stocks rose Thursday, but only after another dizzying day for Wall Street during which a big show of strength from the morning vanished and worries rose about the banking industry.
The Standard & Poor’s 500 added 0.3% for its third gain in four days, but it had been on track for a much healthier gain of 1.8% in the morning. The Dow Jones industrial average saw an early gain of 481 points disappear, and it likewise dipped to a brief loss before closing with a rise of 75 points, or 0.2%. Strength for technology stocks helped the Nasdaq composite hold up better than the rest of the market; it added 1%.
Two big questions have been causing big swings for Wall Street this month, and investors still don’t have a final answer for either. One issue is investors are worried about whether more banks will suffer a debilitating exodus of customers after the second- and third-largest U.S. bank failures in history. The other is all the turmoil clouding the outlook for what the Federal Reserve will do with interest rates after hiking them with market-rattling speed over the last year.
“Until these two clouds get resolved, it’s hard to see the market making any sustained headway,” said YungYu Ma, chief investment strategist at BMO Wealth Management.
“I do think it’s something where it could calm down on its own,” Ma said about the crisis pounding the banking industry, “and I hope that it does. But it’s not clear why that would happen” without more forceful action from the government.
A day earlier, stocks fell sharply after the Fed indicated that although the end may be near for its hikes to interest rates, it still doesn’t expect to cut rates this year.
Traders on Thursday nevertheless were still largely betting the Fed will cut rates later this year.
Markets also were still mulling over comments from Treasury Secretary Janet L. Yellen that may have helped drag down bank stocks Tuesday. She said the government is not considering blanket protections for all customers at all banks.
Overseas, stocks in London fell 0.9% after the Bank of England also raised its key rate by a quarter of a percentage point. Stocks were mixed elsewhere across Europe and Asia.
On Wall Street, the S&P 500 rose 11.75 points to 3,948.72. The Dow gained 75.14 points to 32,105.25, and the Nasdaq climbed 117.44 points to 11,787.40.
The yield on the two-year Treasury dropped to 3.81% from 3.97% late Wednesday.