ATVI - S&P 500 Dow Nasdaq rise as hope for Fed pause overcomes bank fears

2023-03-24 16:08:40 ET

Stocks recovered from an early dip to finish Friday's trading higher, ending a choppy week that saw ongoing concerns about the banking sector and debate about the likelihood of further Federal Reserve rate hikes.

The Nasdaq Composite ( COMP.IND ) closed +0.3% , the S&P 500 ( SP500 ) ended +0.6% and the Dow Jones ( DJI ) finished +0.4% .

"With another major, systemically important European bank seeing market speculation as to its untimely demise, yet another rate hike by the Fed this week, and contradictory statements by the Treasury as to whether supra-FDIC-insured levels in bank accounts are protected or not, the S&P, the Dow and the Nasdaq are on track to close the week and indeed the day ... up," Alex King of Cestrian Capital Research told Seeking Alpha.

"Animal spirits are trumping the wall of worry.  It’s almost as if we are in a bull market," King added. "So we repeat our every-Friday epithet: we remain bullish for 2023."

Shares slumped at the outset of trading amid renewed concerns about the banking sector. This came as German lender Deutsche Bank ( DB ) saw a spike in the cost of default insurance.

While DB finished with a 3% decline, it ended well off its lows of the session, with the major averages also bouncing back from the challenging start. This came in part as consensus solidified around the expectation that the Fed would halt its interest rate hikes at its next policy meeting, scheduled for May.

As stocks closed trading, the markets were pricing in a 92% chance that rates would hold steady at the next central bank meeting. Those odds stood at 73% a day ago and at around 54% last Friday.

The bond market saw light buying, sending Treasury yields lower. The 10-year Treasury yield ( US10Y ) fell 3 basis points to 3.38% and the 2-year yield ( US2Y ) dipped 4 basis points to 3.77%.

Outside the financial sector, Activision Blizzard ( ATVI ) was a notable mover, rising to a new 52-week high after UK regulators narrowed the scope of its inquiry into Microsoft's ( MSFT ) deal to acquire the video game maker .

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