Regional banks popped after Treasury Secretary Janet Yellen said the government might guarantee deposits. But banks lost ground again in after-hours trading.
Gold prices — which now stand at $1,941.6 per ounce — could breach their all-time high of $2,075 in the coming weeks, analysts forecast. One analyst thinks gold could goMorgan Stanley is now "outright bullish" on stocks in Asia and emerging markets. The bank thinks Hong Kong'sIn a sign of how fragile the banking system still is, U.S. regional banks rebounded sharply at the mere prospect of a government guarantee, then pared some of those gains after regular hours.
Note that Yellen didn't say the government would unequivocally help all small banks. These are her exact words, with emphasis added by me: "Similar actions." In other words, her statement had two important qualifications banks need to meet before the government would even consider stepping in: first, the bank must suffer a run; second, it must be important enough that its collapse would affect the rest of the banking sector.
Not that reassuring comments are necessarily bad. Indeed, Yellen's remarks on Tuesday were good for markets. The Dow Jones Industrial Average rose 0.98%. The S&P 500 added 1.30% and hit 4,002.87, its first time since March 6 that it's ended the day above 4,000 since March 6. The Nasdaq Composite jumped 1.58%.
Tomorrow, we'll hear from the Federal Reserve and find out whether it's hiking interest rates even amid the turmoil in banks. Markets are pricing in an 86% chance of a quarter-point increase — though that number is mostly conjecture, since the Fed has been unusually — though understandably — quiet about its intentions.
And even though markets looked surprisingly resilient even amid two weeks of bank trauma, it's not clear how much more devastation markets can absorb — nor does anyone wish to find out.
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