Wall Street follows other markets higher as bank fears ease
By Joe Mcdonald And Matt Ott, The Associated Press on March 29, 2023.
NEW YORK (AP) – U.S. stocks are following markets in Europe and Asia higher as Wall Street shakes off a bit more of the fear that dominated it earlier this month. The S&P 500 was 1% higher in early trading Wednesday. The Dow Jones Industrial Average and the Nasdaq composite also rose. They followed similar gains in other markets around the world. The S&P 500 is on track to close a tumultuous month with a modest gain. That’s despite markets being preoccupied by worries about banks and whether the industry is cracking under the pressure of much higher interest rates. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. Wall Street pointed higher early Wednesday as anxiety about the global financial system began to wane somewhat following three high-profile bank failures. Futures for the benchmark S&P 500 index were up 0.9% before the bell and futures for the Dow Jones Industrial Average added 0.7%. Fears that banks around the world might be cracking under the strain of interest rate hikes to cool inflation temporarily pushed aside unease about slowing economic growth. Some calm has returned after regulators announced measures to shore up the system. “Clearly, investors have not completely lost their anxiety,” Robert Carnell and Min Joo Kang of ING said in a report. The failure of two U.S. banks and one in Switzerland creates a dilemma for central bankers who are trying to cool economic activity and bring down inflation that is near multi-decade highs. The Federal Reserve and central banks in Europe and Asia normally would hike rates further. But the bank failures showed institutions are vulnerable after earlier rate increases caused prices of bonds and other assets on their books to fall. On Wednesday, UBS said that it’s bringing back former CEO Sergio Ermotti to lead the Swiss bank as it executes a government-orchestrated plan to take over struggling rival Credit Suisse. Ermotti, who was the bank’s top executive for nine years and led a turnaround following the 2008 global financial crisis, will take over next Wednesday from CEO Ralph Hamers. UBS shares were up about 2.7% in premarket. Also Wednesday, U.S. lawmakers said Credit Suisse kept allowing wealthy Americans to dodge tax payments, violating a 2014 plea agreement it entered for enabling tax evasion. The U.S. Senate Finance Committee pointed to a possible criminal conspiracy tied to nearly $100 million in secret offshore accounts belonging to one family of American taxpayers that the bank didn’t disclose. The committee said its findings show that more than $700 million was concealed in violation of Credit Suisse’s 9-year-old plea deal. On Tuesday, traders placed bets that the Fed will raise rates at its next meeting in May, though the slight majority still expects rates to hold steady. Traders are still largely betting the Fed will have to cut rates as soon as mid-year to prop up the economy. The two-year Treasury yield, which tracks expectations for the Fed, came down early Wednesday to 4.05% from 4.08% late Tuesday. The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, inched back down to 3.56% from 3.57%. Reports on the U.S. economy have been mixed recently. The job market is solid, but smaller corners of the economy have been showing more weakness. A report Tuesday showed consumer confidence strengthened slightly after two months of declines, while another report suggested U.S. home prices softened in January from December, but not as much as economists expected. At midday in European trading, the FTSE 100 in London rose 0.8%, the DAX in Frankfurt advanced 1% and the CAC 40 in Paris gained 1.3%. In Asia, the Shanghai Composite Index lost 0.2% to 3,240.05 while the Nikkei 225 in Tokyo advanced 1.3% to 27,883.78. The Hang Seng in Hong Kong jumped 2.1% to 20,192.40 after Chinese e-commerce giant Alibaba Group announced plans to split into six business units in an effort to become more agile and unlock value for investors. It said they would include e-commerce, entertainment and logistics. The Kospi in Seoul added 0.4% to 2,443.92 and Sydney’s S&P-ASX 200 advanced 0.2% to 7,050.30. India’s Sensex gained 0.5% to 57,883.28. New Zealand declined while Southeast Asian markets rose. In energy markets, benchmark U.S. crude advanced 95 cents to $74.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 39 cents on Tuesday to $73.20. Brent crude, the price basis for international oil trading, added 79 cents to $78.93 per barrel in London. It gained 53 cents the previous session to $78.65. The dollar gained to 132.14 yen from Tuesday’s 130.80 yen. The euro rose to $1.0860 from $1.0842. On Tuesday, the S&P 500 dipped 0.2%. Most stocks in the index gained, but that was offset by big declines for some banks and modest losses for tech shares. The Dow slipped 0.1% and the Nasdaq composite lost 0.4%. – – – McDonald reported from Beijing; Ott reported from Silver Spring, Maryland. 27-26
