The Credit Suisse rescue eased concerns of a larger financial crisis, which helped Wall Street's major indexes rise on Tuesday as investors awaited the results of the Federal Reserve's monetary policy meeting.
The Fed is projected to raise interest rates by 25 basis points on Wednesday, which is half the anticipated 50 bps increase made before to the banking crisis brought on by the failure of Silicon Valley Bank and Signature Bank (NASDAQ:SBNY).
In spite of efforts by central banks to increase liquidity and the state-backed acquisition of Credit Suisse by UBS, the crisis hasn't been completely averted.
Peter Cardillo, chief market economist at Spartan Capital Securities, said: "While it's a plus that banks so far have been rescued in the sense of deposits, I don't think we've seen the end of the turmoil,"
The greatest thing the Fed could do is just take a break and then review it in May. "The last thing the Fed wants to do is to create havoc in the markets ... and the best thing that they could do is just take a pause and then revisit it in May."
The U.S. banking system is stabilizing as a result of aggressive regulatory initiatives, but more measures to safeguard bank depositors may be necessary if smaller institutions have deposit runs that pose a threat of further contagion, according to the U.S. Minister of the Treasury Janet Yellen.
Major U.S. banks like JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) increased by about 3%, helping to lift the S&P 500.
Regional lenders that had been struggling increased, with First Republic Bank (NYSE:FRC) rising 25% after Monday's record-low price.
JPMorgan CEO Jamie Dimon is coordinating discussions with other major banks about further measures to stabilize First Republic, including a potential investment in the institution.
Peer Western Alliance (NYSE:WAL) Bancorp and PacWest Bancorp both experienced increases of 11.8% and 11%.
The two biggest movers were Tesla (NASDAQ:TSLA) Inc., which jumped 3.7% on expectations of a strong quarter in China following the most recent retail sales data, and Meta Platforms Inc (NASDAQ:META), which jumped 1.8% after Morgan Stanley (NYSE:MS) upgraded the stock to "overweight" from "equal weight."
At 9:41 a.m. ET, the S&P 500 was up 39.32 points, or 1.00%, at 3,990.89, the Nasdaq Composite was up 108.64 points, or 0.93%, at 11,784.18. The Dow Jones Industrial Average was up 292.28 points, or 0.91%, at 32,536.86.
The banking sector led the rise among the 11 S&P 500 sector indexes all in the green.
Ahead of the chipmaker's annual conference for software developers later in the day, Nvidia (NASDAQ:NVDA) Corp climbed 0.7%.
PDD Holdings Inc had a 1.8% decline after Alphabet (NASDAQ:GOOGL) Inc's Google suspended the Play version of the Pinduoduo (NASDAQ:PDD) app from the Chinese e-commerce platform due to malware concerns.
On the NYSE and the Nasdaq, advancing issues exceeded declining ones by a ratio of 6.22 to 1 and 4.31 to 1, respectively.
The Nasdaq recorded 19 new highs and 42 new lows, compared to the S&P index's five new 52-week highs and none new lows.