CNBC Daily Open: Regional Banks Rise, and Everyone Takes a Breath

Caitlin O'Hara | Bloomberg | Getty Images

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Regional banks rise, avoiding a larger collapse in the banking sector.

What you need to know today

  • Moody's Investors Service wasn't convinced by regulators' attempts to protect the banks. The firm downgraded its outlook on the U.S. banking system to negative from stable, saying its rating reflects "the rapid deterioration in the operating environment following deposit runs" on various banks.
  • Traders seem not to agree with the ratings firm, and neither does the CEO of Charles Schwab. Walt Bettinger told CNBC people are still depositing money in his bank and, putting his money where his mouth is, revealed he bought 50,000 shares on Tuesday for his personal account.
  • The price of goods and services in February rose 0.4% for the month — which works out to an annual inflation rate of 6% — according to the consumer price index. Estimates for both readings were right on target. 
  • Meta will lay off 10,000 workers, the company announced Tuesday. It's also closing 5,000 job postings that hadn't been filled yet. Just four months ago, Meta cut 11,000 jobs. The company is living up to its promise of having a "Year of Efficiency" indeed — if efficiency's measured purely in terms of layoffs. Investors liked what they heard: share prices rose 7.25%.
  • PRO Silicon Valley Bank imploded because of higher interest rates. Other companies might face difficulties soon. But these three stocks are resilient in a high interest rate environment, according to an analyst.

The bottom line

How important are banks? Important enough that the CPI — the single most scrutinized and anticipated economic data over the past year — seemed like nothing more than background noise yesterday.

Of course, the muted reaction to the CPI might be because the numbers were exactly in line with estimates. And after the chaotic few days following Silicon Valley Bank's collapse, unsurprising is what markets needed. Stripping out food and energy prices, which tend to fluctuate wildly, core CPI increased 5.5% on a 12-month basis. That is to say, prices are still rising uncomfortably, but at a slower rate than in previous months.

The bigger news of the day was banks' — and investors' — reaction to U.S. financial regulators' measures to protect the financial industry. The SPDR S&P Regional Banking ETF rose 2%. Monday's biggest losers tried to regain lost ground on Tuesday — and even if they didn't manage to do so completely, they at least stopped the slide. First Republic Bank jumped 26.98%, Western Alliance Bancorp added 14.36%, and Keycorp rose 6.95%.

More importantly, the major indexes rallied. The Dow Jones Industrial Average snapped a five-day losing streak with its gain of 1.06%, the S&P 500 increased 1.65% and the Nasdaq Composite climbed 2.14%.

"It's a sigh-of-relief rally, we'll call it, given the lack of any major surprises in CPI and then just the lack of any surprises overnight in the banking space," said Adam Turnquist, chief technical strategist at LPL Financial. "The market's welcoming that."

Let's hope the Federal Reserve doesn't deliver a surprise at its meeting next week, either.

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