Marketbites: Markets Gain on Diminishing Risks
Portfolio Manager Commentary:
U.S. stocks rose Tuesday as investors bet the risk of widespread disaster following the closures of Silicon Valley Bank and Signature Bank has been contained. Investors’ enthusiasm for buying bank stocks lost some steam in the afternoon. But many still notched gains, marking a turn from two sessions of deep selloffs as investors became increasingly confident that those names wouldn’t suffer the same fate as Silicon Valley and Signature. Regulators said Sunday that they created a plan to backstop all depositors in the two banks. Shares of First Republic Bank popped nearly 27% after closing down nearly 62% on Monday.
The rally extended beyond financials, with all of the 11 S&P 500 sectors rising in Tuesday’s session. Stocks gave up some gains in the afternoon as investors responded to news of a Russian fighter jet downing a U.S. drone over the Black Sea.
Traders also focused on the latest U.S. inflation data. The consumer price index rose 0.4% in February from January, matching the consensus estimate of economists polled by Dow Jones. The annualized increase of 6% was also in line with economists’ expectations.
“It’s a sigh-of-relief rally, we’ll call it, given the lack of any major surprises in CPI and then just the lack of any surprises overnight in the banking space,” said Adam Turnquist, chief technical strategist at LPL Financial. “The market’s welcoming that.”
Chart of the Day:
Pfizer Inc. agreed to pay $43 billion for biotech Seagen Inc. and its pioneering class of targeted cancer drugs. Under the terms, Pfizer would pay $229 a share in cash, the drugmaker said Monday. The companies expect the deal, which includes debt, to close late this year or early next year. However, it is likely to face scrutiny from antitrust regulators, who have stepped up their reviews of healthcare and other deals.