Wall St climbs as bank fears ease, rate-hike pause hopes grow

By Amruta Khandekar and Ankika Biswas

(Reuters) – Wall Street indexes rose on Wednesday as worries about stress in the banking sector eased, with some upbeat earnings reports and rising expectations about the Federal Reserve pausing interest rate hikes boosting sentiment further.

Micron Technology Inc advanced 5.8% to the top of the S&P 500 after the chipmaker forecast artificial intelligence will boost its 2025 sales, lifting the Philadelphia semiconductor index up 2.3%.

Lululemon Athletica Inc jumped 12.9% after an upbeat annual results forecast, giving a big boost to the Nasdaq and helping it outperform peers.

Meanwhile, market worries about the banking system have ebbed following a U.S. regulator-backed sale of failed lender Silicon Valley Banks assets as well as lack of fresh signs of trouble in the sector since the buyout deal.

“Markets have been hit by waves of bad news, and we have hit a small pocket of stability with a few decent earnings and the bank crisis seeming closer to being over,” said Rick Meckler, partner at Cherry Lane Investments.

Regional U.S. bank stocks including Truist Financial Corp, Western Alliance Bancorp and First Republic Bank rose between 2% and 5%.

Larger peers Bank of America, Goldman Sachs and JPMorgan Chase & Co climbed 0.2% to 1.3%. The banking turmoil, which started earlier in March with the collapse of Silicon Valley Bank, has led markets to reprice expectations of future monetary tightening by the Federal Reserve.

The Fed will make its interest rate decisions from here on a meeting-to-meeting basis, taking into account the existing financial conditions, Fed Vice Chair for Supervision Michael Barr said in the second day of congressional hearings into the collapse of Silicon Valley Bank.

A key inflation reading expected at the end of the week will provide more clues on the Feds monetary tightening plans.

Traders‘ bets for no rate hike by the Fed in May rose to 59.5% from 52.8% a day earlier, with the remaining bets for a 25-basis-point increase, according to CME Group’s Fedwatch tool.

Rate-sensitive growth names such as Amazon.com Inc and Tesla Inc rose 2.6% and 1.4%, respectively, lifting consumer discretionary stocks up about 1.3%.

Tech majors Apple Inc, Microsoft Corp and Nvidia Crop rose more than 1%, boosting the information technology index.

Real estate stocks also advanced 1.7% to lead sectoral gains.

The CBOE volatility index, known as Wall Streets fear gauge, fell to its lowest since March 9, reflecting easing investor anxiety.

At 11:42 a.m. ET, the Dow Jones Industrial Average was up 192.99 points, or 0.60%, at 32,587.24, the S&P 500 was up 38.38 points, or 0.97%, at 4,009.65, and the Nasdaq Composite was up 147.75 points, or 1.26%, at 11,863.83.

Among other major stock moves, U.S.-listed shares of Alibaba Group Holding Ltd rose 1.7% to a fresh six-week high, a day after rallying on the internet giants revamp and listing plans.

Advancing issues outnumbered decliners by a 3.67-to-1 ratio on the NYSE and by a 1.87-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and no new low, while the Nasdaq recorded 46 new highs and 88 new lows.

(Reporting by Amruta Khandekar and Ankika Biswas; Editing by Dhanya Ann Thoppil and Vinay Dwivedi)