US stocks jump as traders hope the worst of the banking crisis is over

  • US stocks closed higher on Monday as investors struggled to cope with uncertainty in the banking system.
  • UBS’ takeover of Credit Suisse over the weekend cooled some worries about a wider crisis.
  • Morgan Stanley said the recent bank failures mark a “vicious” end to the bear market.

US stocks rose on Monday as traders digested efforts to contain the banking crisis and braced for the next decision at this week’s Federal Open Market Committee meeting.

Over the weekend, UBS agreed to acquire Credit Suisse for $3.25 billion at the urging of the Swiss government. This was done in order to bolster confidence in the banking system after a series of financial blows to the affected European creditor. The forced marriage between the two institutions follows the failures of Silicon Valley Bank and Signature Bank earlier this month that sparked a crisis of confidence in the banking system.

“With the takeover of Credit Suisse by UBS, a solution has been found to ensure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss National Bank said in a statement on Sunday.

In the US, First Republic Bank shares fell 50% after the Wall Street Journal reported that JPMorgan chief Jamie Dimon was in talks between banks to provide additional bailouts to stabilize the struggling lender.

Morgan Stanley’s chief equities strategist Mike Wilson said the fallout in the banking sector marks the beginning of a “vicious” and painful end to an equities bear market.

“This is how bear markets end – an unforeseen catalyst, apparent in hindsight, forces market participants to acknowledge what was right in front of them all along,” Wilson wrote in a note to clients.

Federal Reserve officials will meet Tuesday for a two-day policy meeting. Opinions are divided over whether the Fed will make another rate hike or pause so as not to exacerbate the pain already hitting the financial sector due to the ongoing banking crisis.

Here’s where the US stocks were shortly after the 4:00 pm close on Monday:

Here’s what else happened today:

In commodities, bonds and cryptocurrencies:

  • West Texas Intermediate crude rose 1.24% to $67.57 a barrel. Brent crude, the international oil benchmark, rose 1.1% to trade at $73.75.
  • Gold rose 0.5% to $1,983.70 an ounce.
  • The 10-year Treasury yield rose 10 basis points to 3.50%.
  • Bitcoin fell 2% to $27,867.

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