Wall Street ends up, rebounds after the scare of the day before

The New York Stock Exchange ended sharply higher on Tuesday, thanks to a hunt for bargains in a market less anxious than the day before, seduced by the prospect of a possible early end to monetary tightening by the American central bank (Fed).

The Dow Jones rose 1.06%, the Nasdaq index 2.14% and the broader S&P 500 index gained 1.68%.

After a topsy-turvy session on Monday, “there has been a change of mindset, at least in the short term, about the vulnerability of the American banking system,” noted Steve Sosnick of Interactive Brokers.

For operators, “the risk of banking contagion has evaporated and Wall Street has regained appetite for riskier assets”, abounded, in a note, Edward Moya, of Oanda.

“We were therefore entitled to a rebound, fueled by the fear of some of missing out” on the restart, according to Steve Sosnick.

Martyred the day before, regional and medium-sized banks soared, led by First Republic, which regained 26.98% on Tuesday, after dropping nearly 62% the day before.

Also benefited from the aspiration KeyCorp (+ 18.54%), parent company of the bank of Cleveland (Ohio) KeyBank, the sign of Phoenix (Arizona) Western Alliance (+ 14.36%) and the Californian Pac West (+33.85%).

Less rowdy than the smaller establishments, the big American banks were also sought after on Tuesday, like Wells Fargo (+4.58%) or Citigroup (+5.95%).

The return of a certain serenity to Wall Street led to a movement of bond sales, which drove up their rates, which move in the opposite direction to their prices.

The yield on 10-year US government bonds rose to 3.68%, from 3.57% the day before.

The earthquake that hit the banking sector in recent days has changed the expectations of operators, who see the Fed ending its tightening cycle, after a final quarter-point increase in its key rate next week.

This vision was validated on Tuesday by the publication of the CPI consumer price index, which rose 0.4% over one month in February, as projected by economists.

Over one year, US inflation stands at 6%, against 6.4% in January. This is the most moderate pace since September 2021.

The New York market was also boosted by the announcement by the CEO of Meta (+7.25%), Mark Zuckerberg, of a new wave of 10,000 job cuts, in addition to the 11,000 announced in November. In total, the social networking giant will have reduced its workforce by almost a quarter (-24%).

“If you reduce your workforce, that should improve your margins,” which appeals to investors, “but at the same time, healthy companies don’t make massive layoffs,” says Steve Sosnick. “But right now the markets are cheering.”

The prospect of the Fed’s possible end to rate hikes and Meta’s announcement propelled the entire tech sector, which helped the Nasdaq rise much more than the Dow Jones or the S&P 500.

Semiconductor manufacturers AMD (+6.63%), Broadcom (+2.59%) and Intel (+3.93%) paraded, as did Alphabet (+2.83%).

Elsewhere on the stock market, Uber (+5.00%) and Lyft (+0.59%) rose in the wake of Monday’s decision by a California appeals court, which considered that the law on the status self-employment of VTC (passenger vehicle with driver) drivers was not contrary to the California Constitution.

United Airlines was penalized (-5.37%) after revealing that it expects a loss in the first quarter, which would be the result of a new collective agreement for pilots, even if an agreement has not yet been reached with the Air Line Pilots Association.

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