U.S. stocks soared as U.S. Treasury Secretary Janet Yellen said she would take further action, including hinting that all deposits would be guaranteed.
On the 21st (local time) on the New York Stock Exchange, the Dow rose 0.98%, the S&P 500 rose 1.31%, and the Nasdaq rose 1.58%.
Minister Yellen hinted at the possibility of additional measures, saying, “The banking system is stabilizing in response to the bankruptcies of Silicon Valley Bank (SVB) and Signature Bank.”
At the American Bankers Association (ABA) conference held in Washington, D.C. that day, Minister Yellen said of the recent bank failures, “The situation called for a quick response. In the days that followed, the federal government took decisive and strong action to bolster public confidence in the US banking system and protect the US economy.”
The additional measure he mentioned appears to imply a full guarantee of all deposits.
Earlier, Bloomberg reported that the US government is exploring ways to insure all bank deposits, which would not require Congress to pass new legislation.
According to Bloomberg, the U.S. Treasury is looking at whether the Federal Deposit Insurance Corporation (FDIC) has enough emergency powers to expand deposit guarantees to full, from the current limit of $250,000, without congressional approval.
In a letter to the authorities on the 17th, the National Federation of Small and Medium Banks urged the lifting of the upper limit on deposit insurance.
Minister Yellen’s remarks led to a surge in the stock prices of provincial banks, including the First Republic, which is currently on the verge of bankruptcy, soaring nearly 30%.
As regional banks rose, large-cap stocks such as global investment banks also rose at the same time. City rose 2.2%, JP Morgan Chase 2.71%, and Goldman Sachs 2.54% each. As a result, the S&P 500 financial index soared 2.54%.
Meanwhile, the Fed started the March Open Market Committee (FOMC) meeting, and the results will be announced on the afternoon of the 22nd (early morning of the 23rd Korean time). The Fed is expected to raise interest rates by 0.25 percentage points at this FOMC meeting.
European stock markets, which closed earlier, also surged. Germany’s DAKS surged 1.75%, Britain’s FTSE jumped 1.79%, and France’s Caag surged 1.42%.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.