The first citizens held a great bargain

An exterior view of the First Citizens Bank headquarters in Raleigh, North Carolina on March 27, 2023.

Melissa Sue Gerrits | Getty Images News | Good pictures

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Investors heave a sigh of relief, and it’s all about the banks.

First Citizens’ purchase of SVB’s assets is a bargain in monetary terms. More importantly, it signaled to the markets that despite SVB’s financial problems, there was still value in SVB’s reputation and relationship with its customers. There is hope, then, of reviving a dead bank — something that can only happen in an environment conducive to such miraculous feats.

Another troubled bank, First Republic, rallied after reports that US authorities were considering giving the bank more time to boost liquidity. It may not take much longer, thanks to $30 billion in deposits pledged by a coalition of banks, but the outflow of deposits from smaller banks to larger firms has slowed in recent days, sources told CNBC’s Hugh Sun. .

KeyCorp, which has fallen about 60% since the start of the banking crisis, has a 68.6% chance of rising, according to Citi, which upgraded KeyCorp to buy from neutral.

The optimism was reflected in the SPDR S&P Regional Bank ETF ( KRE ), which rose about 0.87%. The major indexes — except for the Nasdaq Composite (more on that in a moment) — also closed the day in the green. The Dow rose 0.6% and the S&P gained 0.2%. However, the Nasdaq composite fell 0.5%.

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Tech stocks, which have posted sterling gains over the past two weeks as banks have struggled, are now facing difficulties of their own. Alphabet fell 2.83%, Apple lost 2.8% and Meta fell 1.5%. Charles Schwab’s Liz Ann Saunders noted that the S&P 500 information technology sector’s valuation has risen more than 30% relative to the companies’ performance. This isn’t a sign that we’re returning to the epidemic days of high-tech valuations, but it’s something to keep an eye on as the banking crisis (hopefully) is contained.

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