Monday, March 20, 2023

US stocks close higher as major banks side with the First Republic – Usky News

NEW YORK: Wall Street shares closed strongly on Thursday after a consortium of major US private banks announced a $30 billion rescue package for troubled lender First Republic.
After opening with losses, the shares gained momentum on the expected news of the package. All three major US indices closed strongly.
The Dow Jones Industrial Average closed at 32,246.55, up 1.2 percent.
The broad-based S&P 500 rose 1.8 percent to 3,960.28, while the tech-rich Nasdaq Composite Index rose 2.5 percent to 11,717.28.
There are apprehensions about First Republic in the wake of the rapid collapse of the Silicon Valley bank last week. Both the lenders had a sizeable portion of uninsured deposits which were vulnerable to run by depositors.
The package announced Thursday by JPMorgan Chase, Morgan Stanley and nine other giants included $30 billion in uninsured deposits.
Its purpose was to show its faith in the First Republic and the country’s banking system, the group said in a news release. analyst Patrick O’Hare said “the market will be able to afford to allow itself to think that its worst is over”.
He added that “the market appreciated that this was a private sector solution.”
But he also said that the prospects for economic growth “have just gotten more challenging.”
Shares gained as Treasury yields were pushed upward, a sign that demand for safe-haven assets has fallen.
After plunging more than 30 percent earlier in the day, First Republic ended with a gain of 10.0 percent.
The big banks that make up the consortium also advanced, with Wells Fargo, Bank of America and JPMorgan all rising more than a percent.


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