- US stocks closed higher on cooling inflation data as trader shrug off concerns of a potential regional bank crisis.
- The Dow Jones Industrial Average snapped its five-day losing steak on Tuesday.
US stocks climbed Tuesday as traders focused on the latest inflation data and continued to assess the fallout from the collapse of Silicon Valley Bank. The Dow Jones Industrial Average closed in the green, breaking a five-day losing streak.
The consumer price index rose 0.4% in February from January—in line with estimates and a sign that inflation is cooling as the US central bank determines its next move for interest rate hikes. Year-over-year, inflation was 6%, down from 6.4% in February.
Regional bank stocks soared after cratering on Monday from the collapse of SVB and Signature Bank. Shares of First Republic and PacWest jumped 25% and 28% on the day, respectively. However, Moody's put a handful of banks including First Republic on review for a potential downgrade as the SVB fallout pose a risk to the health of regional banking institutions.
The succession of bank failures has sparked heightened speculation the central bank will take a more dovish stance on monetary tightening. Goldman Sachs predicted the Fed will pause rate hikes at the FOMC meeting next week, citing "considerable uncertainty."
"In light of recent stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March," analysts wrote in a client note on Sunday.
Bitcoin Tuesday hit a nine-month high early in the day, soaring past $26,000 shortly after CPI was released. The cryptocurrency has since pared gains, per Messari, but is still ahead 17% in the past week.
Here's where US indexes stood shortly after the 4:00 p.m. close on Tuesday:
- S&P 500:3,920.56, up 1.68%
- Dow Jones Industrial Average: 32,155.40, up 1.06% (336.26 points)
- Nasdaq Composite: 11,428.15, up 2.14%
Here's what else happened today:
- Moody's downgraded its outlook on the US banking system following SVB's closure, citing "rapid deterioration in the operating environment."
- Michael Burry said he doesn't see "true danger" from SVB, adding that the banking crisis will "resolve very quickly."
- Some of the most important crypto-friendly banks just closed. Industry execs and economists weighed in on what's next for the market.
- Citadel chief Ken Griffin told the Financial Times that the US government's decision to save depositors at SVB shows that capitalism is "breaking down before our eyes."
In commodities, bonds and crypto:
- West Texas Intermediate crude oil fell 24.4% to $71.52 per barrel. Brent crude, oil's international benchmark, dropped 3.9% to $77.61.
- Gold dipped 0.4% $1,908 per ounce.
- The yield on the 10-year Treasury was up 16 basis points to 3.68%.
- Bitcoin jumped 5.6% to $22,382.