The New York Stock Exchange ended Friday in the green, closing a turbulent first quarter of the year on a positive note.
The tech-heavy Nasdaq ended the session up 1.74% at 12,221.91 points. The Dow Jones index gained 1.26% to end on 33,274.15 points and the S&P 500 moved 1.44% to 4,109.31 points.
“Financial markets continued to stabilise this week as concerns about the banking sector dissipated,” Oxford Economics analysts summarised.
Buoyed by lower-than-feared inflation
US President Joe Biden had called on Thursday for tighter banking supervision by reinstating a stress-testing requirement for mid-sized banks.
Investors were also encouraged by the moderation in US inflation in February to 5.0% year-on-year from 5.3% the previous month, according to the PCE index favoured by the Federal Reserve (Fed).
On a month-on-month basis, price inflation slowed to 0.3%, slightly below analysts’ 0.4% forecast, according to a consensus published by briefing.com.
Nasdaq gains over 16%
This is good news on the inflation side, especially after the alarming acceleration in prices in January, according to Chris Low of FHN Financial. However, he warned that the market’s attention will focus on employment figures for March, which will be released next week.
Over the quarter, which saw a mini-banking panic among regional banks in March and another Fed rate hike, the broader S&P 500, the market’s most representative index, scored a 6.7% gain and the Nasdaq more than 16%. The Dow Jones is back to where it was at the start of the year.
“One of the reasons the market is bouncing back is because it has passed a major test with the banking crisis. The US financial system has bent but not broken,” Adam Sarhan of 50 Park Investments commented for AFP.
Falling consumer confidence
“The environment is right for equities to rise as many investors have been sitting on the sidelines” for the past year and “there is a lot of money sitting uninvested that is just waiting to work,” he added. “This could be the start of a new bull market.”
The only blemish on the indicator picture was that consumer confidence fell in March for the first time in four months, dropping to 62 points from 67 points in February, according to a University of Michigan survey.
On the value side, all S&P sectors closed in the green, led by consumer spending (+2.61%), real estate (+2.15%) and communication services (+2.07%).
Regional bank First Citizen, which bought bankrupt SVB, climbed 4.21% to $973.10.
Nikla loses over 13%
Department store stocks were on a roll as Macy’s and Target gained more than 3%.
Electric vehicle maker Nikola stalled sharply, losing 13.57% to $1.21. The automaker had announced the day before that it was selling $100 million worth of shares at a discount at Thursday’s trading to build up reserves.
Tesla shares, meanwhile, soared 6.24% to $207.46.
On the bond market, yields on 10-year bills eased sharply to 3.46% from 3.55% the previous day. The two-year yield slid to 4.03% from 4.11% on Thursday.
