In recent weeks, Wall Street has experienced a series of rallies as investors grow more optimistic about the future of the banking sector. It appears that small rate-hike bets are contributing to this positive sentiment, as these bets signal that the economy is recovering and that banks are likely to see increased profits in the coming months. While these rallies are certainly encouraging, there is still much uncertainty in the market, and investors are wise to remain cautious. In this article, we’ll take a closer look at what’s driving these rallies and explore what they could mean for investors.
On Tuesday, the main indexes on Wall Street rose as regional bank stocks rebounded and investors adjusted their expectations for a smaller rate hike by the Federal Reserve in March, following a slight slowdown in consumer price growth. The US Consumer Price Index (CPI) for February was in line with expectations, rising by 0.4% from January, with a 6% yearly increase compared to 6.4% the previous month. The so-called core CPI, which excludes the volatile food and energy components, rose by 5.5% over the same period. After the data, the yield on the two-year Treasury notes rose to 4.3%, and traders expect a 25-basis-point rate hike, with the odds of a pause in rate hikes slipping to 17% for March. The KBW Regional Banking index rose by 7.7%, with First Republic Bank increasing by 49.5%, and Western Alliance Bancorp up by 40.7%. The S&P 500 banking index rose by 2.9%. The main indexes showed gains: The Dow by 1.33%, the S&P 500 by 1.95%, and the Nasdaq Composite by 2.36%. Meta Platforms Inc rose by 6.1% after announcing that it would cut 10,000 jobs in a second round of mass layoffs.
