US stocks experienced a notable rebound overnight as major banks stepped in to rescue the beleaguered First Republic Bank, preventing the potential contagion from evolving into a full-blown banking crisis.
Bank of America, Goldman Sachs, JP Morgan, and others have collectively agreed to deposit USD 30B in First Republic, which has faced a mass withdrawal of customer funds in the wake of Silicon Valley Bank’s collapse and concerns that First Republic could be next.
In a joint statement on Thursday, the banks expressed their confidence in the US banking system, stating, “Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most.”
Among the major US stock indexes, NASDAQ led the way with an impressive 2.48% rally. From a technical perspective, there are indications of bullish momentum, as the index closed above the near-term trend line resistance. This development suggests that the corrective pullback from 12269.55 may have concluded at 10982.80 already.
In the coming days, reaction to the 11827.92 resistance level should be closely monitored. A firm break above this threshold would solidify the bullish case, potentially leading to a resumption of the rally from 10207.47 through the 12269.55 resistance level.