Closing Stock Market SummaryThe stock market had a strong showing today, building on yesterday's pleasing finish for the S&P 500, which closed above its 200-day moving average (3,935). The main indices maintained a position in positive territory throughout today's session, led by gains in the bank stocks. With today's move, the S&P 500 recouped the entirety of the ground that had been lost since March 8 when the SVB Financial blowup started to hit the scene.
Banking stocks led the positive action after a Bloomberg report indicated the Treasury Department is looking at ways to guarantee all bank deposits, if necessary, without congressional approval. This was followed by Treasury Secretary Yellen's remark in prepared comments for the American Bankers Association that the government is prepared to intervene again "if smaller institutions suffer deposit runs that pose the risk of contagion."
Some of the names that had suffered the steepest losses traded up today, like First Republic Bank (FRC 15.77, +3.59, +29.5%), which was also reacting to reports that it's pursuing strategic alternatives, including a possible sale. The SPDR S&P Bank ETF (KBE) rose 5.3% and the SPDR S&P Regional Banking ETF (KRE) rose 5.8%.
The S&P 500 pushed above its March 8 close (3,992) shortly after the start of trading before pulling back some and trading in a relatively narrow range throughout most of the session until a late afternoon lift from the mega cap space had the main indices close near their best levels of the day. The S&P 500 closed just above the 4,000 level in front of tomorrow's FOMC decision.
Market participants are anxious to hear if the Fed will raise rates or pause, and what Fed Chair Powell says to explain any decision that is made. According to the CME FedWatch Tool, there is an 86.4% probability that the Fed will raise rates by 25 basis points.
The Vanguard Mega Cap Growth ETF (MGK) rose 1.6% today versus a 1.3% gain in both the Invesco S&P 500 Equal Weight ETF (RSP) and the S&P 500. Alphabet (GOOG 105.84, +3.91, +3.8%), Tesla (TSLA 197.58, +14.33, +7.8%), and Amazon.com (AMZN 100.61, +2.90, +3.0%) were among the top performers from the mega caps.
The gains in AMZN and TSLA helped propel the S&P 500 consumer discretionary sector (+2.7%) toward the top of the leaderboard today along with energy (+3.5%) and financials (+2.5%). The defensive-oriented utilities (-2.1%) sector, meanwhile, was buried in last place by a wide margin, undercut by rising rates and the market's risk-on tone.
Another supportive factor for the stock market today included some contrarian buying interest after the BofA Global Fund Manager Survey showed investor sentiment is close to levels of pessimism seen at lows of the past 20 years.
There was also some unwinding of the safety trade in the Treasury market. The 2-yr note yield rose 26 basis points to 4.18% and the 10-yr note yield rose 13 basis points to 3.61%.
- Nasdaq Composite: +13.3% YTD
- S&P 500: +4.3% YTD
- S&P Midcap 400: +0.9% YTD
- Russell 2000: +1.1% YTD
- Dow Jones Industrial Average: -1.8% YTD
Reviewing today's economic data:
- Existing home sales surged 14.5% month-over-month in February to a seasonally adjusted annual rate of 4.58 million (consensus 4.16 million) versus an unrevised 4.00 million in January. Sales increased on a month-over-month basis in February for the first time in 13 months. Total sales in February were down 22.6% from a year ago.
- The key takeaway from the report is the understanding that the median selling price declined for the first time in 11 years, underscoring the affordability challenges that have been presented by rising mortgage rates and prospective buyers' misgivings about potentially buying at a cyclical top in the housing market.
Looking ahead to Wednesday, market participants will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior 6.5%)
- 10:30 ET: Weekly crude oil inventories (prior 1.55 mln)
- 14:00 ET: March FOMC Rate Decision (consensus 4.75-5.00%; prior 4.50-4.75%)