The Dow Jones Industrials popped 382.60 points, or 1.2%, to 32,244.58.
The S&P 500 advanced 34.93 points to 3,951.57.
The NASDAQ Composite gained 45.03 points to 11,675.34.
Regional banks rose on Monday, rebounding from big losses in the past week as the group was forced to shore up their deposit bases in the wake of the collapse of Silicon Valley Bank. Wall Street expects more actions may be needed to restore confidence in the banking system after U.S. regulators backstopped SVB’s uninsured deposits and offered new funding for troubled banks one week ago.
PacWest, First Citizens and Fifth Third Bancorp led the gains. The ETF rose 5% at one point during the trading session, but saw some of its gains reverse as First Republic shares fell 47.28%.
The instability in the financial sector over the past two weeks raises the stakes for the Federal Reserve’s interest rate decision on Wednesday. As of Monday morning, there is about a 57% chance of a quarter-point increase by the Fed, according to CME Group data using fed funds futures contracts as a guide. The other 38% is in the no-hike camp, anticipating that Chairman Jerome Powell may start to ease his aggressive tightening campaign that began in March 2022, in the face of the emerging financial contagion.
UBS agreed to buy Credit Suisse for three billion Swiss francs, or $3.2 billion, with the combined bank to have $5 trillion in assets. Credit Suisse shares were down 21% last week. Shortly after UBS announced its takeover deal, the Fed announced it had joined with other central banks in a joint liquidity operation.
The group of central banks — including the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank — agreed to increase the frequency of their U.S. dollar swap line arrangements from weekly to daily.
Prices for the 10-year Treasury slumped, raising yields to 3.49% from Friday’s 3.42%. Treasury prices and yields move in opposite directions.
Oil prices regained 83 cents to $67.57 U.S. a barrel.
Gold prices moved up $9.80 to $1,983.30 U.S. an ounce.