Stocks moved sharply higher over the course of the trading session on Tuesday, extending the upward move seen during trading on Monday. The major averages all showed strong moves to the upside, with the tech-heavy Nasdaq reaching its best closing level in over a month.
The major averages pulled back off their best levels going into the close but held on to strong gains. The Dow jumped 316.02 points or 1.0 percent to 32,560.60, the Nasdaq surged 184.57 points or 1.6 percent to 11,860.11 and the S&P 500 shot up 51.30 points or 1.3 percent at 4,002.87.
The extended rally on Wall Street partly reflected easing concerns about turmoil in the financial sector following recent steps taken to rescue distressed banks in the U.S. and Europe.
Positive sentiment was also generated in reaction to remarks by Treasury Secretary Janet Yellen, who said the government is prepared to once again take action to protect bank depositors if smaller lenders are threatened.
In remarks prepared to the American Bankers Association, Yellen addressed recent steps taken to protect depositors following the failures of Silicon Valley Bank and Signature Bank.
“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” Yellen said.
She continued, “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
Meanwhile, traders continued to look ahead to the Federal Reserve’s highly anticipated monetary policy announcement on Wednesday.
While the recent banking turmoil led to some speculation the Fed may leave interest rates unchanged, CME Group’s FedWatch Tool is currently indicating an 86.4 percent chance of a 25 basis point rate hike.
Sector News
Banking stocks turned in some of the market’s best performances on the day, driving the KBW Bank Index up by 5.0 percent. The index continued to regain ground after ending last Friday’s trading at its lowest closing level in well over two years.
Substantial strength was also visible among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index spiking by 3.5 percent and 3.0 percent, respectively.
The rally by oil service stocks came as crude oil for May delivery jumped $1.85 to $69.67 a barrel, extending the rebound seen on Monday.
Brokerage stocks also saw considerable strength on the day, resulting in a 2.9 percent surge by the NYSE Arca Broker/Dealer Index.
Airline, computer hardware and steel stocks also moved notably higher, while gold and utility stocks bucked the uptrend.
Looking Ahead
The Fed’s monetary policy decision is likely to be in the spotlight on Wednesday amid an otherwise quiet day on the U.S. economic front. – RTTNews
