U.S. Stocks Move Sharply Higher As Banking Industry Concerns Ease

Stocks recovered from early weakness and moved sharply higher over the course of the trading session on Thursday. The major averages all showed strong moves to the upside on the day, with the tech-heavy Nasdaq leading the advance.

While the Nasdaq spiked 283.22 points or 2.5 percent to 11,717.28, closing higher for the fourth straight session, the S&P 500 surged 68.35 points or 1.8 percent to 3,960.28 and the Dow jumped 371.98 points or 1.2 percent to 32,246.55.

Stocks rallied following a report from the Wall Street Journal indicating JPMorgan Chase (JPM), Morgan Stanley (MS) and several other big banks are discussing a potential deal with First Republic Bank (FRC).

People familiar with the matter told the Wall Street Journal the potential deal could include a sizable capital infusion to shore up the beleaguered lender.

First Republic is working on various potential options including a capital raise that could take various forms, the people told the journal.

News that Credit Suisse will borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence also helped ease recent concerns about turmoil in the banking sector.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended March 11th.

The report said initial jobless claims fell to 192,000, a decrease of 20,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to slip to 205,000 from the 211,000 originally reported for the previous week.

A separate report released by the Labor Department showed import prices edged slightly lower in the month of February.

The Labor Department said import prices dipped by 0.1 percent in February after falling by a revised 0.4 percent in January.

Economists had expected import prices to slip by 0.2 percent, matching the decrease originally reported for the previous month.

The report also said import prices in February were down by 1.1 percent compared to the same month a year ago, reflecting the first annual decrease since December 2020.

Sector News

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 4.1 percent to its best closing level in a month.

Substantial strength also emerged among software stocks, as reflected by the 3.5 percent surge by the Dow Jones U.S. Software Index.

Banking stocks also showed a significant turnaround over the course of the session, the KBW Bank Index jumping by 2.6 percent after hitting its lowest intraday level in over two years.

Computer hardware, brokerage and networking stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.8 percent, while China’s Shanghai Composite Index slumped by 1.1 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index surged by 2.0 percent, the German DAX Index jumped by 1.6 percent and the U.K.’s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries came under pressure over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.3 basis points to 3.585 percent after hitting a low of 3.369 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to reports on industrial production and consumer sentiment, with the latter including readings on inflation expectations.

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