Stocks end higher as Yellen vows to safeguard deposits
STORY: Wall Street seesawed to close higher on Thursday as investors were reassured by U.S. Treasury Secretary Janet Yellen's comments that measures will be taken to keep Americans' bank deposits safe.
The Dow ticked up two-tenths of a percent, the S&P 500 three-tenths, and the Nasdaq a full percent.
The session followed Wednesday's slide that came after the Fed’s quarter-point rate hike, Chair Jerome Powell's subsequent Q&A session and Yellen's testimony before Congress in which she ruled out blanket protection for all deposits.
“I think the market volatility that we are seeing today is just a reflection of the challenges that the Federal Reserve created by raising interest rates nine consecutive times….”
While interest rate hikes by central banks around the world have stressed the banking sector – most notably with recent failures of SVB Financial and Signature Bank – Tim Pagliara, Chairman and Chief Investment Officer of CapWealth believes markets have been notably resilient.
“For example, SVB bank is the first collapse of a bank in history that wasn’t credit-related. And so this whole concept of the dangers of the bond market, duration, whether or not deposits were insured – I think the market has taken all of this in stride, very well.”
Still, jitters among regional banks persist, with the S&P 500 banks index dipping 1.2% to its lowest level since November 2020. It has now fallen over 40% from its record high in February 2022.
Among individual movers, shares of Twitter founder Jack Dorsey’s payment company Block slid nearly 15% after Hindenburg Research disclosed its short positions in the company.
Crypto exchange Coinbase Global dropped 14% in the wake of the U.S. Securities and Exchange Commission's threat to sue the company.
And Accenture surged more than 7% after it announced plans to cut about 19,000 jobs – or 2.5% of its workforce.