Stocks rose Thursday, building on the sharp gains from the previous session, as traders bet the regional banking crisis has stabilized.
The Dow Jones Industrial Average traded 162 points higher, or 0.6%. The S&P 500 gained 0.6%, wile the Nasdaq Composite advanced 0.7%.
Regional banks ticked higher, with the SPDR S&P Regional Banking ETF (KRE) advancing 1%. The ETF has gained more than 7% from its March 23 crisis low of $42.24, as investors posit that the central bank has reined in any further banking contagion. Shares of Western Alliance and PacWest gained more than 2% each.
Investors continue to show signs of optimism that perhaps the worst is behind them. The CBOE Volatility Index, Wall Street’s preferred measure of how turbulent the S&P 500 will be over the next 30 days, has pulled back to 19 after reaching 30 in the middle of March.
The moves over the course of the week stem from Wall Street’s attempts to weigh varying factors, said Thomas Martin, senior portfolio manager at Globalt Investments. Those factors, he said, include the latest batch of corporate earnings, the future path of interest rates and potential for a recession and, as of recent weeks, the state of the banks.
“There’s always been the natural seesaw, but it’s sort of never been like this,” he said. “There’s just so many things that are on investors’ minds.”
The three major indexes ended Wednesday higher, with the Nasdaq Composite leading the way with a roughly 1.8% jump. The S&P 500 and Dow followed at 1.4% and 1% higher, respectively.
Weekly jobless claims increased by 7,000 to 198,000, adding to hopes that the Fed could slow down its tightening campaign because the labor market is cooling. Elsewhere, Boston Federal Reserve President Susan Collins, Richmond Fed President Thomas Barkin and Minneapolis Fed President Neel Kashkari are all slated to speak in the afternoon.