Wall Street rose sharply on a rebound in the banking sector awaiting a key Fed meeting

Wall Street closed higher This Tuesday March 21 as fears of a banking crisis subsided as investors awaited the outcome of the Federal Reserve’s two-day policy meeting.

The Dow Jones Industrial Average rose 313.36 points, or 1%, to 32,566.44, while the S&P500 gained 50.84 points, or 1.3%, to 4,002.41. The Nasdaq Composite added 181.47 points, or 1.6%, to 11,860.04.

operators majority expect a 25 basis point rate hike from the Fed on Wednesdayhalf the 50 points expected before the banking crisis triggered by the failures of Silicon Valley Bank and Signature Bank.

The three main US stock indices closed the session in the green, with Small-cap, energy and financial stocks posting some of the biggest gains.

The failure of regional banks last week, followed by the rescue of First Republic Bank and the acquisition of Credit Suisse, sent bank shares tumbling and fueled concerns of global financial sector contagion and fears of a recession.

But bank stocks rallied on Tuesday, building on the previous round’s reversal. Although, despite its recent revival, the S&P Banks Index has lost nearly 18% of its value this month.

“The stock market is coming to accept that the banking crisis was not a crisis after all, and that it was isolated to a handful of banks,” said Oliver Pursche, a senior vice president at Wealthspire Advisors in New York.

“Both the public and private sectors have shown that they are more than capable of supporting and propping up weak institutions.”

Attention now shifts to the Fed, its two-day policy meeting in which members of the Federal Open Market Committee (FOMC) will review their economic projections and, in all likelihood, implement another hike in their rate funds. objective in its ongoing battle against inflation.

First Republic Bank shares saw their biggest one-day percentage jump as JPMorgan CEO Jamie Dimon led talks with other big banks to invest in the bank, according to the Wall Street Journal.