- Bridgette Randall
- 22 Mar, 2023
- Frankfurt
European markets broadly advanced after calmness returned to financial markets.
Coordinated actions between governments and central banks soothed market nerves after the rescue of the second largest bank in Switzerland.
Bond yields were stable and the euro advanced after the ECB president Christine Lagarde said, in her prepared remarks ahead of a conference, "inflation is still high, and uncertainty around its path ahead has increased."
While energy price inflation is easing but domestic prices are still rising and "If this continues and aggregate demand picks up from its current compressed levels, we could see a handover from imported to domestic price pressures that keeps overall price pressures high," noted Lagarde in the statement.
Real wages have declined in the Euro Area and rising wages are likely to contribute to higher inflation in the months ahead.
Euro Area Current Account Surplus Expanded In January
The current account surplus in the Euro Area increased in January after the international goods surplus increased, the European Central Bank said in a report Wednesday.
The current account surplus increased to Є17.0 billion from Є13.0 billion in the previous month, reflecting €14 billion surplus in international trade in services, €11 billion surplus in goods and €1 billion rise in primary income.
These surpluses were partly offset by a deficit of €9 billion in secondary income.
Current account deficit was €98 billion or 0.7% of the euro area GDP in 12 months to January, compared with a surplus of €252 billion or 2.0% one year earlier.
Separately, the Swiss National Bank said current account surplus widened to Sfr 14.7 billion in the fourth quarter of 2022 from Sfr 9.1 billion in the same period a year ago.
UK Inflation Accelerated In January
Consumer price inflation unexpectedly increased in February after falling for four month in a row, the Office for National Statistics reported Wednesday.
Consumer prices rose at a faster pace of 10.4% in February after rising at 10.1% in January, after food and non-alcoholic beverages inflation accelerated to 18.0% from 16.7% in the previous month.
Restaurant and hotel price inflation increased to 12.8% in February from 10.1% in January and apparel and footwear inflation increased to 8.1% from 6.2% and health services cost increased 6.8% from 6.2% in the previous month.
On the other hand, transportation services inflation slowed to 2.9% from 3.1% and housing and utilities prices rose at a slower pace of 26.6% from 26.7% in the previous month.
On a monthly basis consumer prices advanced 1.1% from January.
Indexes & Yields
The DAX index increased 0.1% to 15,216.19, the CAC-40 index advanced 0.2% to 7,131.12 and the FTSE 100 index gained 0.4% to 7,566.84.
The yield on 10-year German Bunds held at 2.28%, French bonds closed at 2.83%,the UK gilts edged up to 3.44% and the Italian bonds increased to 4.14%.
The euro strengthened to $1.08, the British pound to $1.22 and the Swiss franc to 91.82 cents.
Europe Movers
Banks across the eurozone eased after rebounding in the previous session.
Deutsche Bank, Commerzbank, BNP Paribas, HSBC, Societe Generale, and UniCredit declined between 1% and 3%.
L'Oreal, Pernod Ricard and Thales advanced between 1% and 2%.
Mercedes Benz, BMW and Renault added between 0.6% and 1.0%.
- Brian Turner
- 22 Mar, 2023
- New York City
The Federal Reserve revised the fed funds target range by 25 basis points to between 4.75% and 5.0%, matching the expectations set by most investors.
The central bank, in a node to the rising stresses in the U.S. banking system, said "the U.S. banking system is sound and resilient" and added that "some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time."
The Federal Reserve also lowered its economic growth projection in 2023 but also revised slightly higher its estimate of inflation and core inflation in the year from its December projection.
The economic growth is now estimated at 0.4% in 2023 from the previous estimate of 0.5% in December, unemployment rate to 4.5% from 4.6%, the personal consumption price expenditure index or PCE inflation to 3.3% from 3.1% and core PCE inflation to 3.6% from 3.5% respectively.
The policy committee left its estimate of the federal funds rate unrevised at 5.1%, indicating only one additional rate hike before the Fed pauses.
The fast moving banking crisis has complicated the Fed's decision making because rising rates are contributing to losses in generally considered safe investments in Treasury securities.
While the largest 11 banks are perceived to have adequate capital and liquidity, a growing number of banks from the 75 regional banks may be forced to borrow from the central bank or raise capital in depressed market conditions.
- Scott Peters
- 22 Mar, 2023
- New York City
Carvana Co increased 17.9% to $9.34 after the user car retailer announced a debt restructuring plan for some of its $9 billion outstanding debt.
The embattled retailer proposed to exchange its unsecured notes worth about $5.72 billion for secured notes paying 9.0% cash annual interest.
If the debt exchange is fully subscribed, the unsecured debt may decrease between $1 billion and $1.2 billion and lower annual interest expenses by as much as $90 million.
The used car retailer estimated adjusted operating loss in the first quarter to shrink to between $50 million and $100 million from $348 million a year ago.
The company estimated total vehicle sales in the first quarter ending in the range of 76,000 to 79,000, compared to 105,185 units sold in the year ago.
Net operating revenues are expected in the range between $2.6 billion and $2.9 billion compared to $3.5 billion in the year ago, driven by lower units sold.
Non-GAAP gross profit per vehicle is estimated in the range of $4,100 and $4,400 compared to $2,985 in the prior year's quarter.
Finance receivables are estimated to increase to $1.6 billion at the end of the quarter from $1.3 billion at the end of the previous quarter after the recent market volatility negatively impacted the receivable sales.
GameStop Corp soared 45.6% to $25.70 after the specialty retailer swung to a profit and posted a surge in gross margin.
Revenue in the fourth quarter ending on January 28 declined to $2.22 billion from $2.25 billion and the retailer swung to a net income of $48.2 million from a loss of $147.5 million and diluted earnings per share was 16 cents compared to ($0.49) a year ago.
In the full-year revenue decreased to $5.9 billion from $6.0 billion and net loss shrank to $313.1 million from $381.3 million and diluted loss per share fell to $1.103 from $1.33 a year ago.
Nike Inc decreased 1.4% to $123.88 after the athletic footwear and apparel maker reported higher revenue and earnings in its latest quarter.
However, gross margin suffered 330 basis points to 43.3% after the company used markdowns and promotion to liquidate inventories.
Revenue in the fiscal third quarter ending in February increased 14% to $12.4 billion and net income declined 11% to $1.2 billion from $1.4 billion and diluted earnings per share fell to 79 cents from 87 cents a year ago.
Nike increased its quarterly dividend to 34.0 cents from 30.5 cents a share or $528 million and repurchased 12.9 million shares for $1.5 billion.
The company has repurchased 32.0 million shares for $3.4 billion as of the end of February under the stock repurchase program of $18 billion approved in June 2020.
PacWest Bancorp decreased 2.4% to $11.93 and the regional bank in focus said it has "solid liquidity and stabilized deposit balances" in its latest update to investors.
The Pacific Western Bank's holding company said the bank has a total available cash of $11.4 billion, which exceeds $9.5 billion in uninsured deposits.
The bank also confirmed deposit withdrawals were $6.8 billion in the current quarter to March 20.
The bank said it borrowed $3.7 billion from the FHLB, $10.5 billion from the Federal Reserve Discount Window, and $2.1 billion in Bank Term Funding Program,
The bank said it will pursue other "liquidity enhancing measures" and not consider raising capital in the "current depressed market conditions."
- Barry Adams
- 22 Mar, 2023
- New York City
Major averages rested and looked ahead to review Fed's interest rate decision and views on the economy.
Most investors are looking for the Federal Reserve to increase the fed funds rate by 25 basis points, despite the ongoing turmoil in the banking sector.
Inflation in recent months has eased but core inflation, which excludes volatile energy and food prices, has stayed stubbornly high.
The Fed is battling two opposite trends, higher interest rates are needed to curb 4-decade high inflation and higher rates will increase losses in Treasury securities held by banks of all sizes.
The Fed has been advertising the need to bring down inflation to its preferred level of 2% from the current rate near 8% and the central bank's credibility is on the line if it pauses before the substantial reduction in inflation.
The Federal Reserve is set to announce its rate decision at 2 p.m. ET at the end of 2-day meeting today.
Despite the multiple rate hikes over the last twelve months, interest rates are still negative and not restrictive enough.
The current Fed's dilemma is partly the result of its own series of missteps over the last fifteen years, continuing the easy money to goose the economic growth and asset price bubble.
Russia's war in Ukraine and China lockdowns played critical role in elevating inflation but prices were rising substantially before March 2022
Indexes & Yields
The S&P 500 index increased 3.63 points to 4,005.50 and the Nasdaq Composite index added 8.04 points to 11,866.72.
The yield on 2-year Treasury notes edged 4 basis points higher to 4.22%, 10-year Treasury notes inched up 3.61% and 30-year Treasury bonds edged up 1 basis point to 3.72%.
Crude oil decreased 26 cents to $69.50 a barrel and natural gas futures edged down 10 cents to $2.25 a thermal unit.
U.S. Stock Movers
PacWest Bancorp decreased 2.4% to $11.93 and the regional bank in focus said it has "solid liquidity and stabilized deposit balances" in its latest update to investors.
Total available cash is $11.4 billion, which exceeds $9.5 billion in uninsured deposits. The bank said deposit withdrawals were $6.8 billion in the current quarter to March 20.
The bank also confirmed it borrowed $3.7 billion from the FHLB, $10.5 billion from the Federal Reserve Discount Window, and $2.1 billion in Bank Term Funding Program,
GameStop Corp soared 45.6% to $25.70 after the specialty retailer swung to a profit and posted a surge in gross margin.
Nike Inc decreased 1.4% to $123.88 after the athletic footwear and apparel maker reported higher revenue and earnings in its latest quarter.
However, gross margin suffered after the company used markdowns and promotion to liquidate inventories.
- Barry Adams
- 21 Mar, 2023
- New York City
A sharp rebound in regional banks led benchmark indexes higher after Investors put their faith in government reassurances.
Benchmark indexes advanced for the second day this week after investors bid up regional banks following comments from the U.S. Treasury Secretary.
Secretary Janet Yellen showed the government's willingness to extend financial guarantee to uninsured deposits at all regional banks "if needed."
The supportive comments lifted stocks of battered down mid-sized banks.
A third of all U.S. lending to businesses and consumers is provided by about 75 mid-sized banks with assets between $50 billion and $200 billion.
Investors are increasingly focused on the health of the U.S. banking system after the sudden collapse of Silicon Valley Bank and the $30 billion deposit infusion in the First Republic Bank.
Customers with uninsured deposits with balances larger than $250,000 may move deposits to larger banks in the event of a panic, leading to wider bank runs.
Across the Atlantic, banks also rebounded after the ECB president reassured lawmakers that financial institutions have capital and liquidity above demanded by regulators.
Despite the reassurances from the two top central banks in the world, fears of the 2007-08 crisis haunted investors and equity-like volatility was palpable in Treasury debt trading.
Central bankers are making strong statements to calm nervous markets but there is no denying the fact that banks are heading for more losses in the required holdings of government securities and rising interest rates will only add more stress on balance sheets of banks.
Investors also reviewed the latest data on home sales ahead of the interest rate decision by the Federal Reserve after the two-day meeting.
Traders are anticipating the Federal Reserve to slow down the rate hike to 25 basis points in the light of growing stress in the banking system.
Existing Home Sales Advanced in February
Existing home sales increased in February, halting declines for the 12-months in a row, the National Association of Realtors said Tuesday.
Existing home sales, which includes single and multi-family units, increased 14.5% in February from the previous month, but declined 22.6% from a year ago.
Monthly increase in annual pace was the largest increase following 22.4% rise in July 2020.
The median existing-home sales price eased 0.2% from the previous year to $363,000 and the inventory of unsold existing homes was unchanged from the previous month at 980,000 at the end of February, equivalent to 2.6 months' supply at the current monthly sales pace.
"Inventory levels are still at historic lows," Yun added. "Consequently, multiple offers are returning on a good number of properties."
First-time buyers accounted for 27% of all sales in February, down from 31% in January and 29% a year ago, and Individual investors or second-home buyers purchased 18% of homes in February, up from 16% in January but down from 19% a year ago.
Individual investors make up for the bulk of the purchase.
Indexes & Yields
The S&P 500 index increased 1.3% to 4,002.87 and the Nasdaq Composite index advanced 1.6% to 11,860.11.
The yield on 2-year Treasury notes increased 17 basis points to 4.17%, 10-year Treasury notes inched up 12 basis points to 3.59% and 30-year Treasury bonds advanced 6 basis points to 3.72%.
Crude oil futures price for immediate month delivery increased $1.69 to $69.61 a barrel and natural gas price rose 8 cents to $2.30 a thermal unit.
U.S. Stock Movers
Regional banks led the gainers after beaten down banks advanced following comments from the U.S. Treasury Secretary Janet Yellen.
First Republic Bank soared 34.6% to 11,750.69, KeyCorp increased 6.0% to $12.35 and PacWest Bancorporation jumped 15.6% to $11.93.
UBS Group AG soared 9.1% to $20.48 a day after the largest Swiss jumped 3% following the forced takeover of Credit Suisse engineered by the Swiss government and the Swiss National Bank.
Credit Suisse Group AG increased 1% to 96 cents in New York and jumped 5% to 4.7% to 86 Swiss cents.
Foot Locker Inc increased 6.1% to $42.28 a day after the specialty athletic retailer posted better-than-expected same store sales.
The retailer is also increasing its focus on selling online and plans to offer a deeper selection for younger children and kids.
Tesla Inc increased 4.1% to $12.35 after Moody's lifted the electric vehicle makers' bond rating from speculative or "junk bond" to Baa3.
The Baa3 is the lowest tier in the 10-tier investment grade rating system.
European Markets Rebound After ECB Reassurances and Joint Actions by Central Banks
European market indexes rebounded on the optimism that the joint actions by major central banks following the rescue of Credit Suisse stemmed the contagion from spreading.
Despite the rebound on Tuesday, the selloff in European banks is far from over. Interest rates in Europe are still in negative territory and not restrictive enough.
The sustained increases in interest rates are expected to expand unrealized losses in the government bond holdings at all banks- small and large.
Investors are questioning the health of the European banking system and worried that the banks may not have means to raise capital in the event of sharp crunch in liquidity or panic driven deposit outflows.
At least for now, investors set aside the liquidity and deposit outflow worries and bid up bank and financial services stocks.
The UK budget deficit jumped to a record high in the month since record keeping began in 1993, the Office for National Statistics said Tuesday.
The public sector debt, excluding banks, increased £9.7 to £16.7 billion after the government expanded fuel subsidies to a wider group of people.
The UK government has estimated the full-year deficit in 2023 to be around 6.1% of GDP.
Indexes & Yields
The DAX index jumped 1.8% to 15,195.34, the CAC-40 index advanced 1.4% to 7,112.91 and the FTSE 100 index increased 1.8% to 7,536.22.
The yield on 10-year German Bunds rebounded to 2.29%, the French bonds to 2.81%, the UK gilts to 3.37% and the Italian bonds to 4.11%.
The euro inched higher to $1.079, the British pound edged lower to $1.218 and the Swiss franc edged lower to 92.27 cents.
Brent crude oil increased $1.58 to $75.38 a barrel and the Dutch TTF natural gas futures for immediate month delivery edged up 2.13 to 41.46 per MWh.
Europe Stock Movers
European automakers advanced after February vehicle registrations increased at a faster pace after semiconductor shortages eased.
New passenger cars registrations in the European Union rose 11.5% to 802,763 vehicles in February, following an 11.3% increase in January.
Registrations rose in most markets in the union and Spain led the region with an increase of 19.2% followed by 17.4% in Italy.
In the first two months of 2023, registrations in Spain jumped 32.1%, in Italy rose 18.2%, in France increased 9.1% and in Germany edged up 0.2%.
Battery electric vehicle registrations increased 12.1% of total but petrol-fueled vehicles led with 36.9% market share.
BMW AG increased 1.8% to €97.34, Renault SA rose 3.7% to €36.76, Stellantis NV, the parent of Fiat and Chrysler, increased 2.2% to €16.19.
Pernod Ricard increased 0.9% to €202.40 and the French spirit and wine company said its American unit has agreed to acquire a majority stake in Skrewball, the maker of peanut butter flavored whiskey brand.
The company is also in the middle of repurchasing €300 million of its stock between February 20 and April 6 and not to exceed the share price of €320 a share.
- Bridgette Randall
- 21 Mar, 2023
- Frankfurt
European automakers advanced after February vehicle registrations increased at a faster pace after semiconductor shortages eased.
New passenger cars registrations in the European Union rose 11.5% to 802,763 vehicles in February, following an 11.3% increase in January.
Registrations rose in most markets in the union and Spain led the region with an increase of 19.2% followed by 17.4% in Italy.
In the first two months of 2023, registrations in Spain jumped 32.1%, in Italy rose 18.2%, in France increased 9.1% and in Germany edged up 0.2%.
Battery electric vehicle registrations increased 12.1% of total but petrol-fueled vehicles led with 36.9% market share.
BMW AG increased 1.8% to €97.34, Renault SA rose 3.7% to €36.76, Stellantis NV, the parent of Fiat and Chrysler, increased 2.2% to €16.19.
Pernod Ricard SA increased 0.9% to €202.40 and the French spirit and wine company said its American unit has agreed to acquire a majority stake in Skrewball, the maker of peanut butter flavored whiskey brand.
The company is also in the middle of repurchasing €300 million of its stock between February 20 and April 6 and not to exceed the share price of €320 a share.
Kingfisher Plc declined 1.6% to 268.86 after the UK-based home improvement company reported a decline in sales and earnings in the fiscal year ending in January 2023.
Sales in the full-year declined 0.9% to £13.06 billion from £13.18 a year ago and after-tax net income dropped 44.1% to £471 million from £843 million and diluted earnings per share fell to 23.8 pence from 40.3 pence a year ago.
SThree Plc edged up a fraction to 432.65 pence after the specialty staffing company reported higher net fees in the fiscal first quarter of 2023.
Group net fees in the first quarter ending in February increased 4% from a year ago. Net fees in the three largest markets representing a total of 73% of revenue, fees in Germany increased 7%, in the Netherlands rose 4% but fell 6% in the U.S.
Just Eat Takeaway.com NV increased 1.3% to 1,562.38 pence after the food delivery company said it plans to reclassify some UK employees as self-employed, resulting in 1,700 redundancies.
- Bridgette Randall
- 21 Mar, 2023
- Frankfurt
European market indexes rebounded on the optimism that the joint actions by major central banks following the rescue of Credit Suisse stemmed the contagion from spreading.
Despite the rebound on Tuesday, the selloff in European banks is far from over. Interest rates in Europe are still in negative territory and not restrictive enough.
The sustained increases in interest rates are expected to expand unrealized losses in the government bond holdings at all banks- small and large.
Investors are questioning the health of the European banking system and worried that the banks may not have means to raise capital in the event of sharp crunch in liquidity or panic driven deposit outflows.
At least for now, investors set aside the liquidity and deposit outflow worries and bid up bank and financial services stocks.
The UK budget deficit jumped to a record high in the month since record keeping began in 1993, the Office for National Statistics said Tuesday.
The public sector debt, excluding banks, increased £9.7 to £16.7 billion after the government expanded fuel subsidies to a wider group of people.
The UK government has estimated the full-year deficit in 2023 to be around 6.1% of GDP.
Indexes & Yields
The DAX index jumped 1.8% to 15,195.34, the CAC-40 index advanced 1.4% to 7,112.91 and the FTSE 100 index increased 1.8% to 7,536.22.
The yield on 10-year German Bunds rebounded to 2.29%, the French bonds to 2.81%, the UK gilts to 3.37% and the Italian bonds to 4.11%.
The euro inched higher to $1.079, the British pound edged lower to $1.218 and the Swiss franc edged lower to 92.27 cents.
Brent crude oil increased $1.58 to $75.38 a barrel and the Dutch TTF natural gas futures for immediate month delivery edged up 2.13 to 41.46 per MWh.
Europe Stock Movers
European automakers advanced after February vehicle registrations increased at a faster pace after semiconductor shortages eased.
New passenger cars registrations in the European Union rose 11.5% to 802,763 vehicles in February, following an 11.3% increase in January.
Registrations rose in most markets in the union and Spain led the region with an increase of 19.2% followed by 17.4% in Italy.
In the first two months of 2023, registrations in Spain jumped 32.1%, in Italy rose 18.2%, in France increased 9.1% and in Germany edged up 0.2%.
Battery electric vehicle registrations increased 12.1% of total but petrol-fueled vehicles led with 36.9% market share.
BMW AG increased 1.8% to €97.34, Renault SA rose 3.7% to €36.76, Stellantis NV, the parent of Fiat and Chrysler, increased 2.2% to €16.19.
Pernod Ricard increased 0.9% to €202.40 and the French spirit and wine company said its American unit has agreed to acquire a majority stake in Skrewball, the maker of peanut butter flavored whiskey brand.
The company is also in the middle of repurchasing €300 million of its stock between February 20 and April 6 and not to exceed the share price of €320 a share.
- Scott Peters
- 21 Mar, 2023
- New York City
Regional banks led the gainers after beaten down banks advanced following comments from the U.S. Treasury Secretary Janet Yellen.
Last week the Federal Reserve partially reversed its quantitative tightening program and added $300 billion in liquidity.
In months to come it will be clear if the Fed's balance sheet expansion will be inflationary or only act as a backstop and keep stressed banks solvent.
But for now, Secretary Yellen supported the balance sheet expansion move.
“The Fed facility and discount window lending are working as intended to provide liquidity to the banking system.
Aggregate deposit outflows from regional banks have stabilized," said Yellen to a group of gathering bankers on Tuesday.
First Republic Bank soared 34.6% to 11,750.69, KeyCorp increased 6.0% to $12.35 and PacWest Bancorporation jumped 15.6% to $11.93.
UBS Group AG soared 9.1% to $20.48 a day after the largest Swiss jumped 3% following the forced takeover of Credit Suisse engineered by the Swiss government and the Swiss National Bank.
Credit Suisse Group AG increased 1% to 96 cents in New York and jumped 5% to 4.7% to 86 Swiss cents.
Foot Locker Inc increased 6.1% to $42.28 a day after the specialty athletic retailer posted better-than-expected same store sales.
The retailer is also increasing its focus on selling online and plans to offer a deeper selection for younger children and kids.
Citi Trends, Inc dropped 12.5% to $20.39 after the apparel and accessories retailer focused on the needs of African American and multicultural families reported a sharp decline in sales.
Sales in the fourth quarter ending on January 28 dropped 13.1% to $209.5 million and net income declined to $6.6 million from $9.8 million and diluted earnings per share fell to 81 cents from $1.16 a year ago.
In the full-year 2022, total sales declined 19.8% to $795 million and net income dropped to $58.9 million from $62.2 million and diluted earnings per share increased to $7.17 from $6.91 a year ago.
The retailer opened 12 new stores, remodeled 35 stores and closed 10 stores to end the fiscal year with 611 locations.
GameStop Corp increased 8.7% to $18.34 ahead of the specialty retailer releasing its fourth quarter earnings after the regular trading hours.
GameStop said revenue in the third quarter ending in October declined to $1.18 billion from $1.29 billion and net loss shrank to $94.7 million from $105.4 million and diluted loss per share fell to 31 cents from 35 cents a year ago.
Tesla Inc increased 4.1% to $12.35 after Moody's lifted the electric vehicle makers' bond rating from speculative or "junk bond" to Baa3.
The Baa3 is the lowest tier in the 10-tier investment grade rating system.
- Brian Turner
- 21 Mar, 2023
- New York City
Existing home sales increased in February, halting declines for the 12-months in a row, the National Association of Realtors said Tuesday.
Existing home sales, which includes single and multi-family units, increased 14.5% in February from the previous month, but declined 22.6% from a year ago.
Monthly increase in annual pace was the largest increase following 22.4% rise in July 2020.
The median existing-home sales price eased 0.2% from the previous year to $363,000 and the inventory of unsold existing homes was unchanged from the previous month at 980,000 at the end of February, equivalent to 2.6 months' supply at the current monthly sales pace.
"Inventory levels are still at historic lows," Yun added. "Consequently, multiple offers are returning on a good number of properties."
Single-family home sales jumped to a seasonally adjusted annual rate of 4.14 million in February, up 15.3% from 3.59 million in January but down 21.4% from the previous year.
The median existing single-family home price declined 0.7% from a year ago to $367,500 in February.
First-time buyers accounted for 27% of all sales in February, down from 31% in January and 29% a year ago, and Individual investors or second-home buyers purchased 18% of homes in February, up from 16% in January but down from 19% a year ago.
Individual investors make up for the bulk of the purchase.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.60% as of March 16, down from 6.73% from the previous week but up from 4.16% one year ago.
- Barry Adams
- 21 Mar, 2023
- New York City
Benchmark indexes advanced for the second day this week after investors bid up regional banks following comments from the U.S. Treasury Secretary.
Secretary Janet Yellen showed the government's willingness to extend financial guarantee to uninsured deposits at all regional banks "if needed."
The supportive comments lifted stocks of battered down mid-sized banks.
A third of all U.S. lending to businesses and consumers is provided by about 75 mid-sized banks with assets between $50 billion and $200 billion.
Investors are increasingly focused on the health of the U.S. banking system after the sudden collapse of Silicon Valley Bank and the $30 billion deposit infusion in the First Republic Bank.
Customers with uninsured deposits with balances larger than $250,000 may move deposits to larger banks in the event of a panic, leading to wider bank runs.
Investors also reviewed the latest data on home sales and the sharp rebound in European markets.
Existing Home Sales Advanced in February
Existing home sales increased in February, halting declines for the 12-months in a row, the National Association of Realtors said Tuesday.
Existing home sales, which includes single and multi-family units, increased 14.5% in February from the previous month, but declined 22.6% from a year ago.
Monthly increase in annual pace was the largest increase following 22.4% rise in July 2020.
The median existing-home sales price eased 0.2% from the previous year to $363,000 and the inventory of unsold existing homes was unchanged from the previous month at 980,000 at the end of February, equivalent to 2.6 months' supply at the current monthly sales pace.
"Inventory levels are still at historic lows," Yun added. "Consequently, multiple offers are returning on a good number of properties."
First-time buyers accounted for 27% of all sales in February, down from 31% in January and 29% a year ago, and Individual investors or second-home buyers purchased 18% of homes in February, up from 16% in January but down from 19% a year ago.
Individual investors make up for the bulk of the purchase.
Indexes & Yields
The S&P 500 index increased 0.7% to 3,978.13 and the Nasdaq Composite index advanced 0.6% to 11,750.69.
The yield on 2-year Treasury notes increased 20 basis points to 4.13%, 10-year Treasury notes inched up 8 basis points to 3.53% and 30-year Treasury bonds advanced 4 basis points to 3.75%.
Crude oil futures price for immediate month delivery increased 56 cents to $68.35 a barrel and natural gas price declined 6 cents to $2.15 a thermal unit.
U.S. Stock Movers
Regional banks led the gainers after beaten down banks advanced following comments from the U.S. Treasury Secretary Janet Yellen.
First Republic Bank soared 34.6% to 11,750.69, KeyCorp increased 6.0% to $12.35 and PacWest Bancorporation jumped 15.6% to $11.93.
UBS Group AG soared 9.1% to $20.48 a day after the largest Swiss jumped 3% following the forced takeover of Credit Suisse engineered by the Swiss government and the Swiss National Bank.
Credit Suisse Group AG increased 1% to 96 cents in New York and jumped 5% to 4.7% to 86 Swiss cents.
Foot Locker Inc increased 6.1% to $42.28 a day after the specialty athletic retailer posted better-than-expected same store sales.
The retailer is also increasing its focus on selling online and plans to offer a deeper selection for younger children and kids.
Tesla Inc increased 4.1% to $12.35 after Moody's lifted the electric vehicle makers' bond rating from speculative or "junk bond" to Baa3.
The Baa3 is the lowest tier in the 10-tier investment grade rating system.