The Oklahoman

Wall Street regains lost ground as some bank stocks recover

- Stan Choe and Alex Veiga

Stocks ended broadly higher on Wall Street Tuesday, as some of the most breathtaki­ng moves from a manic Monday reversed course.

The S&P 500 rose 1.7% after a report showed inflation is still high but heading lower. Stocks of smaller and midsized banks recovered some of their prior plunges caused by worries that customers could yank out all their cash. Treasury yields soared to trim their historic drops.

The Dow Jones Industrial Average rose 1.1%, while the Nasdaq composite added 2.1%. Gains in technology stocks, banks and communicat­ions services companies powered much of the rally.

A week ago, Wall Street was expecting Tuesday’s report on inflation to be the most important data of the week, if not month. The worry at the time was that inflation is staying stubbornly high, which could force the Federal Reserve to pick up the pace again on its hikes to interest rates.

Such hikes can drive down inflation by slowing the economy, but they raise the risk of a recession later on. They also hurt prices for investment­s.

Tuesday’s report showed that inflation at the consumer level was 6% in February, versus a year before. That matched economists’ expectatio­ns and was a slowdown from January’s 6.4% inflation rate, but it’s still way above the Fed’s target.

In normal times, that could indeed call for an increase in the size of rate hikes. The trouble for the Fed is that it’s also facing a banking system that may already be cracking due to all of its rate increases from the last year. The second- and third-largest bank failures in U.S. history have both come since Friday.

An easier Fed could give the banking system and economy more breathing room, but it could also give inflation more oxygen.

Traders rushed Monday to place some bets that the Fed could decide to keep rates steady at its next meeting, instead of accelerati­ng to a hike of 0.50 percentage points as they thought a week ago. Following the inflation data, bets are largely falling on it sticking with an increase of 0.25 points later this month, according to data from CME Group.

Stocks across the financial industry rose Tuesday, recovering some of their steep earlier drops. First Republic Bank jumped 27% after plunging 67.5% over the prior three days. KeyCorp gained 6.9%, Zions Bancorp rose 4.5%, and Charles Schwab climbed 9.2%.

Facebook’s parent company climbed 7.3% after it said it expects expenses this year to be lower than earlier forecast. Meta Platforms is cutting workers and eliminatin­g job openings to rein in expenses. All told, the S&P 500 rose 64.80 points to 3,920.56, ending a three-day losing streak. The Dow added 336.26 points to 32,155.40, and the Nasdaq gained 239.31 points to 11,428.15. The Russell 2000 index of smaller companies rose 32.59 points, or 1.9%, to 1,776.89.

Gold for April delivery fell $5.60 at $1,910.90 an ounce. Silver for May delivery rose 12 cents to $22.04 an ounce, and May copper fell 5 cents to $4 a pound.

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