US Stocks on 2-Day Rally               03/21 15:41

   Stocks are rising on a calming Wall Street Tuesday, even the banks most 
beaten down by the industry's crisis, on hopes for more help from the U.S. 
government.

   Silicon Valley Bank's quicksilver failure began two weeks ago. The Dow Jones 
Industrial Average rose 316 points, or 1%, while the Nasdaq composite jumped 
1.6%.

   Markets around the world have pinballed sharply this month on worries the 
banking system may be cracking under the pressure of the fastest set of hikes 
to interest rates in decades. This week's rally now runs into a huge test: On 
Wednesday afternoon, the Federal Reserve will announce what's largely expected 
to be its latest increase to rates.

   Tuesday's strength for stocks came after Treasury Secretary Janet Yellen 
told a bankers' group more government assistance "could be warranted" if risks 
arise that could bring down the system. That could mean making sure customers 
at a weakened bank get all their money, even those with more than the $250,000 
limit insured by the Federal Deposit Insurance Corp.

   "Janet Yellen coming out and saying should other deposits need to be 
protected, they're willing and able to do that, I think that's a very strong 
statement," said Mary Ann Bartels, chief investment strategist at Sanctuary 
Wealth. "And so markets have been able to calm down."

   Earlier this month, the U.S. government said it would make all depositors at 
Silicon Valley Bank and Signature Bank whole. They were the second- and 
third-largest U.S. bank failures in history.

   Those banks had struggled as depositors rushed to pull their money out en 
masse. Such runs can topple a bank, and investors have since been hunting for 
the next one that could fall. Much focus has been on First Republic Bank, which 
shares some similar traits with Silicon Valley Bank, and its stock had lost 90% 
for the month through Monday.

   It jumped 29.5% Tuesday.

   Other smaller and mid-sized banks also rallied, including a 9.1% climb for 
Comerica and a 9.3% jump for KeyCorp.

   Hopes for the banking industry began to turn over the weekend after 
regulators pushed together two huge Swiss banks. Shares of both banks rose 
Tuesday in Switzerland, including a 12.1% jump for acquirer UBS. Credit Suisse, 
meanwhile, rose 7.3% after tumbling a day earlier.

   Credit Suisse had longstanding problems that were relatively unique, but all 
banks on both sides of the Atlantic have the shared challenge of navigating a 
world with much higher interest rates than a year earlier.

   Central banks have jacked up rates at a blistering pace in hopes of getting 
high inflation under control. But such moves act like huge hammers with little 
nuance. They try to bring down inflation by slowing the entire economy.

   That raises the risk of a recession later on. Higher rates also hurt prices 
for stocks and other investments. That's one of the factors that hurt Silicon 
Valley Bank, which saw the value of its bond investments drop with the rise in 
rates.

   Earlier this month, much of Wall Street was bracing for the Fed to 
reaccelerate its hikes and raise by 0.50 percentage points on Wednesday. A 
string of reports on the economy had come in hotter than expected, including 
data on the job market, retail sales and inflation itself.

   But all the turmoil in the banking industry has traders betting the Fed will 
stick with an increase of 0.25 points.

   Traders are even beginning to bet that the Fed may cut interest rates later 
this year. Rate cuts can act like steroids for markets, and they would also 
give the economy and banks more room to breathe. On the downside, they could 
give inflation more fuel.

   It was just a few weeks ago that Wall Street had washed out a prior set of 
hopes for a rate cut. The resurgence of such expectations could be setting the 
market up for more disappointment in the future if they don't happen.

   "We've been down this road before where the market expects rate cuts and the 
Fed dials them back," Bartels said.

   That's why even more attention may be on what the Federal Reserve says about 
future moves on rates Wednesday than on what it actually does. The Fed is 
slated to release its latest projections on where policymakers see inflation, 
the job market and rates are heading in upcoming years.

   In markets abroad, stocks rallied across Europe and Asia.

   In the bond market, huge swings continue to rock the market. Yields have 
been mostly plunging this month on expectations for an easier Fed. The yield on 
the two-year Treasury, for example, tumbled from its highest level since 2007, 
above 5%, back below 4%, which is a massive move for it.

   It rose to 4.17% from 3.97% late Monday.

   The 10-year Treasury yield, which helps set rates on mortgages and other 
important loans rose to 3.60% from 3.44%.

   The S&P 500 rose 51.30 points to 4,002.87. The Dow gained 316.02 to 
32,560.60, and the Nasdaq climbed 184.57 to 11,860.11.