S&P 500 jumps as banks rebound on UBS-Credit Suisse deal

The SandP 500 rose on Monday after UBS agreed to buy struggling rival Credit Suisse, boosting sentiment in banking stocks just a day before the Federal Reserve’s two-day meeting. The SandP 500 rose 0.7%, the Dow Jones Industrial Average rose 1%, or 318 points, and the Nasdaq Composite rose 0.2%. Switzerland’s largest bank UBS (NYSE:UBS) has agreed to buy Credit Suisse for $3.2 billion. European Central Bank President Christine Lagarde said the central bank is “ready to respond as needed” to maintain eurozone stability and further promote financial stability in Europe. The bailout of Credit Suisse ( NYSE:CS ) helped boost banking sentiment, with regional banks such as Fifth Third Bancorp ( NASDAQ:FITB ), Lincoln National Corporation ( NYSE:LNC ) and NYCB leading gains. New York Community Bancorp (NYSE: NYCB ) surged more than 33 percent after its subsidiary Flagstar Bank agreed to buy a large stake in Signature Bank following the bank’s recent collapse. However, First Republic Bank ( NYSE:FRC ) was not among the risers, and for more than 41 years, Standard and Poor’s has downgraded the struggling bank deeper into junk territory due to continued liquidity problems. The downgrade comes just days after 11 banks pumped $30 billion into the regional bank. But SandP said the move was unlikely to solve First Republic’s liquidity problems and warned another downgrade was possible. Microsoft Corporation (NASDAQ: MSFT) and Amazon.com Inc. (NASDAQ: AMZN ) weighed on technology after the latter announced 9,000 job cuts at its cloud services division, Amazon Web Services. A rate hike by the US Treasury also kept technology on edge ahead of the Fed’s two-day meeting starting on Tuesday. The Federal Reserve is expected to raise benchmark interest rates by 0.25 percent at the end of its two-day meeting on Wednesday, but uncertainty remains high after the turmoil in the banking sector. About 70 percent of investors expect interest rates to rise, but Goldman Sachs said it expects a pause at this week’s March meeting because of “stress in the banking system.” Energy stocks were also in bullish territory as volatility in energy prices shuddered as the banking crisis could hurt global growth and energy demand. APA Corporation (NASDAQ: APA ), Hess Corporation (NYSE: HES ) and EQT Corporation (NYSE: EQT ) lifted energy by more than 2% on the day. “Oil prices fell despite a boom in Chinese demand amid banking stress, recession fears and investor outflows,” Goldman Sachs cut its 12-month Brent forecast to $94 a barrel from $100 previously. In other news, Virgin Orbit Holdings Inc (NASDAQ: VORB ) plans to file for bankruptcy if the commercial real estate company doesn’t get financing, according to multiple media reports. Its shares fell 27 percent.

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