Wall Street recovers and fears of the contagion effect of the financial crisis dissipate

Wall Street It rises again this Tuesday, March 21, after the Credit Suisse bailout allayed fears of a greater banking crisis, while investors remain attentive to the Federal Reserve’s monetary policy.

In this context, the S&P500 advances 0.60% to 3,974.63 points driven by large US banks such as JPMorgan, Citigroup and Bank of America by 4%. Regional banks also climbed along with First Republic Bank by 35% after hitting a record low on Monday. PacWest Bancorp and Western Alliance Bancorp advance up to 13%.

The Dow Jones Industrial Average rose 0.48% to 32,399.64 points while the Nasdaq Composite added 0.6% to 11,750.24 points.

Traders largely expect a 25 basis point rate hike from the Fed on Wednesday, half the 50 basis point expected before the banking crisis triggered by the failures of Silicon Valley Bank and Signature Bank.

The state-backed takeover of Credit Suisse by UBS and measures taken by central banks to increase liquidity have eased fears of contagion in the banking sector more broadly, but analysts believe that the crisis has not been entirely averted.

“While it’s a bonus that banks have been bailed out so far in the deposit sense, I don’t think we’ve seen the end of the turmoil,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“The last thing the Federal Reserve wants to do is create chaos in the markets (…) and the best thing they could do is take a break and review it again in May”he added.

The US banking system is stabilizing after strong action by regulators, but further measures to protect depositors may be warranted if smaller banks experience deposit withdrawals that threaten further contagion, the US Treasury Secretary said. Janet Yellen.

Meta Platforms Inc rose 3.2% after Morgan Stanley upgraded its rating to “overweight” from “equal weight”, while Tesla Inc rose 5% on expectations of a good quarter in China.