© Reuters.
By Liz Moyer
Investing.com -- U.S. stocks ended higher as a rally in bank stocks put aside worries that the trouble in the banking sector would wind up becoming a contagion.
At 16:05 ET (20:05 GMT), the Dow Jones Industrial Average closed up 336 points or 1.1%, while the S&P 500 was up 1.7% and the NASDAQ Composite was up 2.1%.
Also lifting the mood in the markets: The Bureau of Labor Statistics reported a 0.4% rise in the consumer price index in February from the previous month, cooling slightly from January’s reading. On an annual basis, inflation rose 6%, also cooling from the prior reading. Core prices, which exclude food and fuel, rose 0.5% from the prior month, slightly more than expected.
That is leading traders to put more bets on a smaller rate hike by the Federal Reserve next week.
Most futures traders are expecting a quarter of a point rate hike next week, though 26% of traders are betting on the Fed to pause rate hikes, according to CME’s FedWatch tool.
The collapse of Silicon Valley Bank (NASDAQ:SIVB) over the weekend rippled through bank stocks on fears of a wider contagion. Regulators have stepped in to backstop depositors of SVB and Signature Bank (NASDAQ:SBNY), which also shut down.
Shares of large regional banks sank on Monday but were rebounding on Tuesday. KeyCorp (NYSE:KEY) closed up 7%. Comerica Inc (NYSE:CMA) was up almost 4%, while PacWest Bancorp (NASDAQ:PACW) was up almost 34%. First Republic Bank (NYSE:FRC) was up 27%.
Stocks’ afternoon climb was temporarily interrupted by reports a Russian fighter jet struck the propeller of an American surveillance drone over the Black Sea, causing U.S. forces to down the drone in international waters.
Meta Platforms Inc (NASDAQ:META) is cutting another 10,000 workers, incurring charges of as much as $5 billion, and warned about the possibility of economic uncertainty sticking around. Shares rose 7%.
Shares of AMC Entertainment Holdings Inc (NYSE:AMC) sank 15% after shareholders of the largest movie theater chain voted to approve a reverse stock split and the conversion of APE equity units into common shares. The matter is also before a Delaware Chancery Court judge.
