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European Central Bank raises key policy rate
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First Republic Bank shares tank
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Meta, Snap climb as U.S. threatens TikTok ban
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Dow up 0.84%, S&P 500 up 1.32%, Nasdaq up 1.97%
(Updates prices and comments)
By David Carnevali
NEW YORK, March 16 (Reuters) –
A strong rebound by financials helped Wall Street's main indexes extend gains on Thursday, after media reports said some of the country's largest lenders were in talks to aid First Republic Bank.
The latest twist in the regional banks saga came on the heels of a 50 basis point rate hike by the European Central Bank, which earlier in the day had dampened investor sentiment already hurt by fears of a banking crisis.
Financial institutions, including JP Morgan Chase & Co and Morgan Stanley, stood ready to deposit up to $30 billion into First Republic Bank's coffers to stabilize the lender, according to several reports, including Reuters sources.
"Banks are looking out for one another," said Huntington Private Bank chief investment officer, John Augustine.
"We had two outliers go down and now they want to save what is considered a more mainstream bank."
Shares of JP Morgan and Morgan Stanley were up 1.62% and 1.87% respectively, while the possibility of a rescue buoyed First Republic Bank, which gained 10.72%.
The positive sentiment spread to other regional lenders, with Alliance Bancorp and PacWest Bancorp advancing 12.21% and 0.26%, respectively, after opening in the red.
The KBW regional banking index gained 3.32%, while the S&P 500 banking index advanced 1.65%, as both sub-indexes reversed losses.
Meanwhile, U.S. Treasury Secretary Janet Yellen said the U.S. banking system remains sound and Americans can feel confident that their deposits will be there when needed.
U.S.-listed shares of Credit Suisse ticked 2.55% higher after the bank secured a credit line of up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence.
Data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to continued labor market strength, which could persuade the Fed to keep raising rates further.
Weak retail sales figures, as well as data showing a downward trend in producer inflation, on Wednesday had bolstered bets of a small rate hike by the Federal Reserve at its meet concluding on March 22.
Money markets are still largely pricing in a 25-basis-point rate hike by the Fed in March..
The Dow Jones Industrial Average rose 268.11 points, or 0.84%, to 32,142.68, the S&P 500 gained 51.23 points, or 1.32%, to 3,943.16 and the Nasdaq Composite added 225.66 points, or 1.97%, to 11,659.71.
Facebook parent Meta Platforms and Snapchat operator Snap Inc rose 0.59% and 7.35%, respectively, after the U.S. administration threatened to impose a ban on TikTok.
Advancing issues outnumbered declining ones on the NYSE by a 2.45-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored advancers.
The S&P 500 posted 3 new 52-week highs and 22 new lows; the Nasdaq Composite recorded 29 new highs and 207 new lows. (Reporting by David Carnevali)
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