The S&P 500 added 56.54 points, or 1.4%, to 4027.81. The Dow Jones Industrial Average gained 323.35 points, or 1%, to 32717.60. The tech-heavy Nasdaq Composite rose 210.16 points, or 1.8%, to 11926.24. All of the S&P 500’s 11 sectors finished in the green.
After a string of bank collapses and mergers, lack of news might be good news for stocks. American-traded shares of UBS Group AG rose $0.83, or 4.3%, to $20.10 after the bank said
would return as chief executive following its recent takeover of
The lender’s Swiss-listed shares also advanced.
“Anyone making near-term forecasts for the U.S. stock market right now needs a considerable amount of humility,” said Chris Brightman, chief executive officer and chief investment officer at Research Affiliates. “There always is uncertainty, but it’s especially higher today.”
—the beleaguered U.S. regional bank that has come under pressure owing to its similarities to recently failed peers—advanced $0.76, or 5.6%, to $14.26.
Wall Street is still assessing how the recent banking shake-up will affect the broader economy. The number of houses going under contract in the U.S. unexpectedly rose in February for a third consecutive month.
Technology and other growth stocks, which tend to benefit most from a brighter economic outlook due to investors’ hopes for far-out profits, helped lead Wednesday’s charge higher.
jumped $4.26, or 7.2%, to $63.54, after the chip maker said industry fundamentals were improving. Tech stocks added 2.1% on the day.
Research Affiliates’ Mr. Brightman said he has plowed all of his liquid cash into Treasury Inflation-Protected Securities, or TIPS. Adding roughly 0.5% monthly inflation—forecast by the Cleveland Fed—to TIPS’ yields, which now sit above 1%, shakes out to offer more than 7% a year. That is because the value of those bonds fluctuates with the consumer-price index.
“It’s a great yield,” he said. If inflation continues to rise, the bonds’ prices rise, and if there is a financial crisis, bondholders are exposed to the safety of the U.S. government. U.S. stocks also remain historically overvalued and the equity risk premium—stocks’ expected earnings over safer Treasurys—is “pretty damn skinny,” according to Mr. Brightman.
Stocks have largely trotted higher this year: The Nasdaq Composite is set to gain 14% in the first quarter, snapping a yearlong losing streak. Investor sanguinity has persisted, despite bank failures and lingering macroeconomic issues.
“The trends from last year are still broadly in place,” said Meb Faber, co-founder and chief investment officer of Cambria Investment Management. “U.S. stocks are still generally expensive, and inflation remains elevated.”
Renewed hopes for the Federal Reserve to stop tightening financial conditions and for the economy to skirt a recession have led to beaten-down tech stocks and bonds episodically soaring for multiweek periods. Fed rate increases—or hot economic data auguring further hikes down the road—tended to throw a wrench in those trades. Still, investors continue to buy stock-market dips, particularly favoring large tech-company shares.
Mr. Faber said he’s positioning for value stocks and foreign stocks, particularly shares that meet both criteria, to outperform over the next decade.
Anxiety that rushed into the market during the recent banking turmoil seems to have leaked back out. The Cboe Volatility Index, or VIX, hovered around 19, a level indicative of complacency. The VIX—sometimes referred to as Wall Street’s “fear gauge”—measures options pricing tied to the S&P 500 in about a month. Just a couple of weeks ago, it had crossed 30, signifying investors were racing to protect themselves from a downturn.
As of now, traders seem to be betting the banking crisis is in the rearview mirror.
To be sure, stocks’ jolt might be fueled in part by weaker trading activity. Banking turmoil and reignited economic uncertainty might be keeping investors away from the market, allowing fewer traders to generate bigger swings. Stock volumes in major exchanges hit their lowest levels of the year on Tuesday, according to Dow Jones Market Data.
The 10-year Treasury yield edged lower to 3.565% from 3.566% on Tuesday.
Overseas stocks also posted solid gains. Hong Kong’s Hang Seng Index was up 2.1%, boosted by Alibaba, and Japan’s Nikkei 225 rose 1.3%. The Stoxx Europe 600 index added 1.3%.
Oil prices dropped after looking set for gains earlier in the day. Brent crude oil fell 0.5% to $78.28 a barrel.
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