US stocks rise on inflation data, easing banking sector fears

Traders working on the floor of the New York Stock Exchange in New York City. PHOTO: REUTERS

NEW YORK – US stocks closed higher on Tuesday, on easing worries about banking sector upheaval and as data showed price increases cooled in February, fuelling hopes that the US Federal Reserve could moderate its response to inflation.

Regional banking stocks also bounced back, recouping some of the ground they lost following last week’s dramatic collapse of Silicon Valley Bank (SVB).

The tech-heavy Nasdaq Composite Index ended the day up 2.1 per cent at 11,428.15 following a late rally.

The broad-based S&P 500 climbed 1.7 per cent to close at 3,920.56, while the Dow Jones Industrial Average advanced 1.1 per cent to 32,155.40.

Traders received some welcome news at the start of the day with the release of the US consumer price index (CPI), which slowed to an annual rate of 6 per cent in February – still well above the Fed’s 2 per cent target.

But core CPI, which excludes volatile food and energy prices, crept up month on month by 0.5 per cent, slightly higher than analysts predicted.

Regional banking stocks rebounded after a torrid few days of trading in the wake of SVB’s collapse, with shares of First Republic Bank rising more than 25 per cent.

Seacoast Banking Corporation of Florida ended the day more than 16 per cent higher, while KeyCorp bank’s share price finished up by about 7 per cent.

The improved mood provides much-needed respite for traders, who have faced a turbulent time since SVB’s shock collapse last week in the face of a bank run by depositors.

Attention is now likely to turn to the Fed’s interest rate decision next week, with analysts divided on whether the central bank will pause its aggressive campaign of increases in the face of stubborn inflation.

Among individual companies, Facebook parent Meta Platforms jumped 7.3 per cent after announcing it will shed 10,000 jobs in the coming months and leave 5,000 other roles unfilled.

United Airlines tumbled 5.4 per cent as it projected a loss in the first quarter due to the hit from a new collective bargaining agreement with pilots. AFP

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