Wall Street ended the day on a positive note on Thursday as investors took heart from US Treasury Secretary Janet Yellen’s assurances that steps would be done to safeguard Citizens’ accounts.
As Yellen continued her congressional testimony in the final hour, all three of the major US stock indices reversed an earlier surge and went negative.
The Nasdaq rose to the top of the group as a result of falling Treasury yields, particularly an 18 basis point decline in two-year note yields.
According to Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta, “you see this market and you watch it change direction in a short period of time and it’s based on some market players’ perception over what someone said and how it influences how their trading.”
There are numerous ways to understand anything that people say, the market as a whole is telling you.
The meeting came following the Fed’s rate hike on Wednesday, Fed Chair Jerome Powell’s subsequent Q&A session, and Yellen’s speech before Congress, in which she rejected blanket protection for all depositors.
The banking industry is under stress as a result of interest rate increases by central banks all over the world, as evidenced by the recent collapses of SVB Financial Group and Signature Bank.
The KBW Regional Bank index fell 3.0% as regional banks continue to experience jitters.
The S&P 500 banks index dropped 1.2% to reach its lowest point since November 2020; since its record high in February 2022, it has now dropped by more than 40%.
Hopes that there is light at the end of the central bank tightening tunnel were further fueled by remarks from the Bank of England suggesting that inflation will likely diminish rapidly.
Every central bank that was expected to raise rates did so, said Martin of GLOBALT. The effect of higher rates on financial stability is therefore less of a concern, but it is still quite concerning, while inflation is currently the most critical issue and poses the greatest risk to the system.
The S&P 500 increased by 11.75 points, or 0.30%, to 3,948.72, while the Nasdaq Composite increased by 117.44 points, or 1.01%, to 11,787.40. The Dow Jones Industrial Average increased by 75.14 points, or 0.23%, to 32,105.25.
Only the two technology and communication services sectors, out of the S&P 500’s 11 major industries, concluded the day higher.