Wall Street closed higher on Thursday as market participants were reassured by U.S. Treasury Secretary Janet Yellen's reassurances that measures will be taken to keep Americans' deposits safe.
All three major U.S. stock indexes reversed an earlier rally, turning red before clawing their way back to positive territory in the final hour as Yellen resumed her congressional testimony.
Dropping Treasury yields, particularly an 18 basis point drop in two-year note yields, helped growth shares boost the Nasdaq to the head of the pack.
"You watch this market and you watch it change direction in a short period of time and it’s based on some market participants’ interpretation over what someone said and how it affects how their trading," said Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta.
"The market as a whole is telling you is there are a lot of different ways to interpret all the things people are saying."
The session followed Wednesday's boom-and-bust moves after the Fed's rate hike, Fed Chair Jerome Powell's subsequent Q&A session and Yellen's testimony before Congress in which she ruled out blanket protection for all deposits.
Interest rate hikes by central banks around the world have stressed the banking sector, which became manifest with the recent failures of SVB Financial Group and Signature Bank.
Jitters among regional banks persist, with the KBW Regional Bank index sliding 3.0%.
The S&P 500 banks index dipped 1.2% to its lowest level since November 2020, and it has now fallen over 40% from its record high in February 2022.
Comments from the Bank of England that inflation will probably quickly fade also helped fuel hopes of light at the end of the central bank tightening tunnel.
"Every central bank that was on path to raise rates raised them," GLOBALT's Martin added. "Therefore they’ve all identified that inflation is currently the most important issue and poses the most risk to the system, whereas the effect of higher rates on financial stability isn’t as much of a concern - although it remains highly concerning."
The Dow Jones Industrial Average rose 75.14 points, or 0.23%, to 32,105.25, the S&P 500 gained 11.75 points, or 0.30%, to 3,948.72 and the Nasdaq Composite added 117.44 points, or 1.01%, to 11,787.40.
Of the 11 major sectors of the S&P 500, only communication services and tech ended the session higher.
$First Republic Bank(FRC-N)$ dropped 6.0% in volatile trading in the wake of Yellen's testimony.
Chipmaker Nvidia Corp advanced 2.7% after Needham raised its price target.
Block Inc shares slid 14.8% after Hindenburg Research disclosed its short positions in the company.
Crypto exchange Coinbase Global Inc dropped 14.1% in the wake of the U.S. Securities and Exchange Commission's threat to sue the company.
Accenture surged 7.3% after it announced plans to cut about 2.5% of its workforce.
Declining issues outnumbered advancing ones on the NYSE by a 1.59-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 32 new lows; the Nasdaq Composite recorded 51 new highs and 296 new lows.
Volume on U.S. exchanges was 12.35 billion shares, compared with the 12.80 billion average over the last 20 trading days.