Happy Saint Patrick’s Day!
U.S. stocks surged Thursday after a group of big banks agreed to deposit $30 billion with troubled lender First Republic Bank, providing a much-needed jolt of confidence in the markets and helping soothe fears of a rolling banking crisis.
- The Dow rose +371.98 or +1.17%
- The S&P 500 ended higher +68.35 or +1.76%
- The Nasdaq advanced +283.22 or +2.48%
The collapse of Silicon Valley Bank and two other U.S. lenders have sent shockwaves through the markets in recent days, with investors concerned about the risks associated with the banking sector. However, the announcement of a $30 billion package from 11 banks to shore up First Republic Bank late in the afternoon on Thursday helped to alleviate some of those worries.
The package, which is being provided by Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, is composed of $5 billion in uninsured deposits from each bank. U.S. regulators commended the move, and First Republic shares ended the day up 10%, erasing an earlier loss of 36%. While the stock remains down more than 70% in March, the positive news helped to assuage some of the market’s fears.
Treasury Secretary Janet Yellen also weighed in on the issue Thursday, assuring senators that the U.S. banking system is still on solid footing following the government’s decision to backstop depositors at two failed banks last weekend. It’s clear that the authorities are taking this situation seriously and are willing to step in when necessary to protect the financial system.
With the package for First Republic now in place and the government’s support for depositors at two failed banks, investors can have a greater degree of confidence in the banking sector. Nevertheless, it’s important to remain vigilant and monitor any further developments closely…….[read more]
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