Stock Market Today: Stocks Rally on Credit Suisse, First Republic Bank Rescue News

Stocks opened lower Thursday before reversing course mid-morning and rallying into the close. 

Sparking the turnaround were reports that several of the country's largest banks – including blue chip stocks JPMorgan Chase (JPM (opens in new tab)) and Bank of America (BAC (opens in new tab)) – will provide beaten-down regional lender First Republic Bank (FRC (opens in new tab)) with a massive injection of deposits. Also lifting sentiment was news that Swiss National Bank offered a lifeline to Credit Suisse (CS (opens in new tab)). 

It's been a chaotic week in the financial sector sparked by weekend headlines surrounding the failures of Silicon Valley Bank and Signature Bank. While this has created substantial volatility among bank stocks, the broader market has been fairly resilient. Still, today's positive headlines allowed investors to breathe a sigh of relief that the disruption could be contained. 

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

As a result, the Nasdaq Composite jumped 2.5% to 11,717, the S&P 500 soared 1.8% to 3,960, and the Dow Jones Industrial Average gained 1.2% to 32,246.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

All but one sector – real estate (unchanged) – finished higher, with technology (+2.8%) and communications services (+2.2%) leading the way. Financials (+1.9%) were another solid gainer, thanks to strong price action seen across the sector. 

FRC stock, for one, was down more than 36% at its session low before ending the day up 10.3%. Boosting the volatile bank stock was news that JPM, BAC, Wells Fargo (WFC (opens in new tab)) and Citigroup (C (opens in new tab)) will deposit $5 billion apiece into First Republic. Several other banks will reportedly commit smaller amounts to the rescue effort.

Elsewhere, CS stock was up 18% at its session high after the bank secured a $50 billion loan from Swiss National Bank in what it called (opens in new tab) "decisive action to pre-emptively strengthen its liquidity." Shares ended the day down 0.2%, though. Anxiety around the strength of the Swiss bank – sparked in part by the recent closures of SVB and Signature Bank – sent its shares tumbling on Wednesday. 

Is tech the new safety play?

Are tech stocks the new safety plays? Tech and tech-related sectors like communications services have shown relative strength throughout the first quarter. Looking at the numbers, the tech-heavy Nasdaq is up more than 11% for the year-to-date vs a roughly 3% gain for the broader S&P 500 and a 3% decline for the blue-chip Dow.

There are two potential reasons for the outperformance, says Carrie King, global deputy chief investment officer of BlackRock Fundamental Equities. One is possible bargain hunting after a significant underperformance from tech and tech-related stocks last year. Another is the notable cost-cutting that's been underway, including massive layoffs. 

For investors looking to play the hot hand of the market, there are plenty of ideas, including those found among the best tech stocks and the best communication services stocks. As for industry-specific opportunities, these are the best semiconductor stocks and the best AI stocks to buy now.