March 14 (Reuters) – Beaten U.S. bank shares bounced back on Tuesday, pushing Wall Street’s main indexes higher, while a slight slowdown in consumer price growth prompting investors to price in a smaller rate hike by the Federal Reserve in March.
Data showed the US Consumer Price Index (CPI) rose 0.4% in February from 0.5% in January as Americans faced continued higher costs for rent and food. On an annual basis, the CPI rose 6% in February, compared to 6.4% in the previous month.
Excluding volatile food and energy components, the CPI rose 0.5% after rising 0.4% in January. In the 12 months to February, the so-called core CPI gained 5.5% after an increase of 5.6% in January.
The yield on two-year Treasury notes, which best reflects interest rate expectations, rose to 4.3% after the data, with traders holding bets on a 25-basis-point increase. at the rate of March.
The chances of stopping the rate increase decreased to 17% for March.
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Stocks have been hammered in the past few days after the collapse of SVB Financial Group ( SIVB.O ) and peer Signature Bank ( SBNY.O ) sent shockwaves through the banking sector.
Investors are now hoping that the Fed will ease its aggressive monetary policy to prevent a liquidity crisis.
“While the CPI continued to trend lower for the eighth consecutive month today, it is still very high by the Fed’s standards,” said Charles Hepworth, investment director, GAM Investments.
“So, continued hawkishness should still be warranted, or at least that’s what the Fed wants to convey.”
Regional banking stocks rebounded after experiencing double-digit losses over the past few days, with the KBW Regional Banking index (.KRX) rising 7.7%.
First Republic Bank (FRC.N) jumped 49.5%, while shares of peer Western Alliance Bancorp (WAL.N) rose 40.7%. Trading of shares in both banks has been halted several times due to volatility.
The S&P 500 banking index (.SPXBK) rose 2.9% after recording its biggest one-day percentage drop since June 2020 in the previous session.
Meta Platforms Inc (META.O) rose 6.1% after Facebook’s parent said it would cut 10,000 jobs in a second round of mass layoffs.
Other major rate-sensitive growth stocks such as Apple ( AAPL.O ), Alphabet Inc ( GOOGL.O ) and Tesla ( TSLA.O ) rose between 1% and 4%.
At 11:46 am ET, the Dow Jones Industrial Average (.DJI) was up 422.41 points, or 1.33%, at 32,241.55, the S&P 500 (.SPX) was up 75.20 points, or 1.95%, at 3,930.96, and the Nasdaq The Composite (.IXIC) rose 263.75 points, or 2.36%, to 11,452.59.
Shares of Uber Technologies Inc ( UBER.N ) and Lyft Inc ( LYFT.O ) rose 5.6% and 3% respectively, after a California state court revived a ballot measure that allowed the app-based services that treat drivers as independent contractors rather than employees.
United Airlines Holdings Inc (UAL.O) fell 4.6% on a downbeat forecast for the first quarter.
The increase in issues was outnumbered by a 6.05-to-1 ratio on the NYSE and a 3.52-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and five new lows, while the Nasdaq recorded 18 new highs and 79 new lows.
Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Additional reporting by Shashwat Chauhan, Editing by Saumyadeb Chakrabarty, Uttaresh Venkateshwaran and Anil D’Silva
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