Dow rises more than 100 points, First Republic leads regional banks higher: Live updates

All signs are increasingly pointing to a likely recession in the next 12 months, according to Wells Fargo.

The firm noted on Tuesday that the widening spread between the 10-year and 1-year treasury yield “breached its recession-prediction threshold in August,” and is signaling a 91% likelihood of a downturn within a year.

Wells Fargo employed a three-pronged approach to forecast the odds of a recession in previous reports and highlighted the spread between both the 10-year yield and the 1-year yield as well as the fed funds rate and the 10-year.

“Since 1955, every time the fed funds rate has breached the 10-year yield’s cycle low, a recession and accompanying change in monetary policy has occurred within the next 18 months,” the firm said.

Meanwhile, “the likelihood of a deeper-than-average recession is rising” as the spread between the 10-year yield and the 1-year remaining negative.

– Brian Evans

Bitcoin has been on a steady climb since the crisis in the banking system began to emerge with Silvergate Bank earlier this month.

The cryptocurrency has rallied 45% over the past 11 days and is now past the key $25,200 level chart analysts had been watching, and sitting at $28,000.

Bitcoin is “showing upside exhaustion signals on both daily and weekly timeframes, and into what should be very heavy resistance in the $28,000-$30,000 range,” BTIG’s Jonathan Krinsky said in a note Tuesday.

“There is also a pretty large negative momentum divergence vs. the January highs,” he added.

— Tanaya Macheel

— Sarah Min

Stocks are continuing their rally from Monday’s gains.

The S&P 500 was recently up 0.67%, and the Dow Jones Industrial Average added 0.48%. The tech-heavy Nasdaq Composite rose nearly 0.64%. The 10-year Treasury yield rose to 3.564%.

— Pia Singh

Invesco Solar ETF (TAN) is up 4.93% as of Tuesday 12:45 p.m. ET, putting it on pace toward its best day since Nov. 30, 2022, when it gained 5.65%.

Canadian Solar is on track to close above its 50-day moving average level for the first time since Mar. 9.

— Hakyung Kim

These stocks are among those making the biggest moves in midday trading:

• Tesla — Shares popped 6.4% after Moody’s upgraded Tesla to Baa3 rating from its junk-rated credit. Moody’s called the electric-vehicle maker the “foremost manufacturers of battery electric vehicles” and said the upgrade reflects Tesla’s prudent financial policy and management’s operational track record.
• First Republic, KeyCorp, U.S. Bancorp — Regional bank stocks rebounded on Tuesday as Treasury Secretary Janet Yellen said the government would consider backstopping deposits at more banks in order to protect the financial system. Shares of First Republic jumped more than 41.3%, while KeyCorp added 8.8%. U.S. Bancorp rose nearly 8.2%.
• Foot Locker — Foot Locker gained nearly 7% after Citi upgraded the retail stock to a buy from neutral after its investor day on Monday. The firm said the company’s move away from malls and toward digital, kids and loyalty projects is a step in the right direction.

Click here to see more stocks making midday moves.

— Pia Singh

The recent strength in the stock market is showing up in the behavior of retail traders, Interactive Brokers Chairman Thomas Peterffy said on “Squawk on the Street.”

“Investors, very interestingly, they have turned back to stocks,” said Peterffy, who added that Interactive Brokers has seen about $1.5 billion going into the stock market on its trading platform over the past week.

The most popular stocks are mostly in the technology space, Peterffy said, pointing to Apple and Amazon as examples.

— Jesse Pound

Seven out of 11 sectors in the S&P 500 were trading in positive territory during midday trading on Tuesday, with financial stocks leading the broader index.

The financial sector rose 2.49% during midday trading after Treasury Secretary Janet Yellen gave reassurances Tuesday morning that the government is ready to step in if needed amid the banking crisis.

First Republic Bank shares jumped more than 39% on the back of those comments.

— Sarah Min

The recent crisis in the banking sector will lead to excess tightening in bank lending standards, according to Bank of America. The firm expects tighter lending standards to put downward pressure on economic activity.

“While policymakers employ tools to preserve financial stability in the short-run in response to emergent stresses in several regional banks, the open question is whether, and to what extent, the situation will lead to excess tightening in bank lending standards over time,” the bank’s U.S. economist Michael Gapen wrote in a Tuesday note.

He added, “While large enterprises have flexibility to access both the banking system and capital markets for funding, small business and households are more reliant on bank credit. The risk of a sizable shock to bank lending behavior has introduced downside risk to the outlook and, in turn, the Fed’s policy path.”

Gapen added that he anticipates a recession in the latter half of 2023 as a result of the recent fallout in the financial sector.

“We maintain our outlook for a mild recession that begins later this year, with a 1% peak- to-trough decline in GDP and a back-up in the unemployment rate to 4.7% by 2Q of next year,” the economist said. “Prior to recent events we saw upside risks to our growth and projected Fed terminal rate … Looking ahead, we feel headwinds from a weaker labor market, higher borrowing costs, tighter credit standards, and weaker balance sheets will lead consumers to reduce spending temporarily and push the saving rate higher.”

— Hakyung Kim

As the Federal Reserve is looking to announce its latest monetary policy decision on Wednesday, Insight Investment believes that inflation will continue to remain high in 2023.

“The 2% inflation objective is unlikely to be realized in 2023 but there is some hope that we may see a more normal inflation environment by 2024,” Brendan Murphy, Head of Core Fixed Income, North America wrote in a Tuesday note.

“As the lagged effect of the Fed’s policy rate increases along with the more recent tightening of financial conditions associated with the banking sector concerns works their way through the economy, the effects are likely to be disinflationary. Those same conditions present many risks to the growth picture,” Murphy added.

Insight Investment expects the central bank will raise interest rates by 25 basis points on Wednesday, but added that “the recent market volatility could be an opportunity for them to pause at this meeting.”

“The argument for a pause is strong as another 25bp increase could be seen as contributing to market volatility and financial instability,” said Murphy.

“However, not delivering on 25bps might cause some to question the Fed’s resolve in bringing inflation lower which could create a whole new set of problems. Pausing may lead to an easing of financial conditions that work against their inflation goals.”

— Hakyung Kim

These are some of the stocks hitting new highs during Tuesday’s trading session:

• Darden trading at levels not seen since January 2022
• NVR, Inc. trading at levels not seen since February 2022
• Boston Scientific trading at all-time high levels back to its IPO in May 1992
• Insulet trading at levels not seen since November 2021
• Arista Networks trading at all-time high levels back to its IPO in June 2014
• Broadcom LTD trading at levels not seen since January 2022
• Churchill Downs trading at levels not seen since October 2021
• Allegro MicroSystems trading at all-time highs back to its IPO in October 2020

— Samantha Subin

New York Community Bancorp‘s deal to have its subsidiary Flagstar take over basically all of Signature Bank’s deposits, its 40 branches and some of its loan portfolio “checks many boxes,” according to D.A. Davidson.

Analyst Peter Winter upgraded the stock to buy from neutral. His price target remained unchanged at $11.50, implying an upside of 33.6% from where the stock closed Monday.

The stock is up 5.2% in morning trading Tuesday, continuing to rally on the news of the deal. Shares have advanced 38.3% since Monday’s session began.

Winter said the deal would bring more diversification to the bank’s loan portfolio and strengthen its deposit franchise. But he did note the potential risk of the private banking and deposit gathering teams leaving and taking those relationships to competing banks.

Still, he said the deal provides funding flexibility and should help the company’s margin.

— Alex Harring

Shares of First Republic soared by more than 38% on Tuesday morning. The move marks a reversal for the bank’s losses yesterday, after Standard & Poor’s cut its credit rating again over the weekend. Investors are optimistic after Janet Yellen’s reassurances early Tuesday.

Shares of other U.S. regional banks continued to be in the green. Shares of PacWest Bancorp gained about 15.7%. Zions Bancorp. and KeyCorp added 5.3% and 5.8%, respectively. New York Community Bancorp. was up 1.8% and Fifth Third Bancorp rose 3.8%.

— Pia Singh

Sales of previously owned homes rose 14.5% in February compared with January, according to a seasonally adjusted count by the National Association of Realtors. That put sales at an annualized rate of 4.58 million units.

It was the first monthly gain in 12 months and the largest increase since July 2020, just after the start of the Covid-19 pandemic. Sales were, however, 22.6% lower than they were in February of last year.

Higher mortgage rates have been putting downward pressure on home prices since last summer. Home prices were lower year-on-year for the first time in 131 consecutive months, or nearly 11 years, in February.

— Hakyung Kim

Here’s how the major indexes opened: 

• The S&P 500 was recently up 1.1%
• The Dow Jones Industrial Average gained 333 points, or 1.05%. 
• The Nasdaq Composite added nearly 1%. 

Investors are showing optimism after Treasury Secretary Janet Yellen said Tuesday morning that the government is willing to backstop more bank deposits if necessary.

— Pia Singh

Tesla was upgraded to a Baa3 rating from a junk credit rating on Monday by Moody’s Investors Service.

“The rating action reflects Moody’s expectation that Tesla will remain one of the foremost manufacturers of battery electric vehicles with an expanding global presence and very high profitability,” Moody’s said in a statement.

The upgrade also reflects Tesla’s prudent financial policy and management’s operational track record, among other governance considerations. Moody’s expects the electric-vehicle maker to deliver nearly 1.8 million vehicles in 2023, a 34% increase from 2022 and nearly double the deliveries in 2021, the firm’s statement said.

“Moody’s anticipates that liquidity will remain very good, underpinned by a very sizeable and growing balance of cash and investments, prospects for free cash flow of more than $7 billion, and limited debt maturities in the next two years,” Moody’s said.

Tesla’s stock was up about 4% in morning trading.

— Michelle Fox

Here are some companies making the biggest moves in the premarket:

• Tesla — The electric vehicle maker gained more than 2% after Moody’s upgraded it to a Baa3 rating from its junk-rated credit. Moody’s said the upgrade reflects Tesla’s prudent financial policy and management’s operational track record.
• New York Community Bancorp — The bank jumped 6.6%, a day after surging 31.65%. New York Community Bancorp’s subsidiary, Flagstar Bank, will assume nearly all of Signature Bank’s deposits, some of its loan portfolios and all 40 of its former branches.
• Harley-Davidson — The motorcycle maker rose 4.1% following an upgrade by Morgan Stanley to overweight from equal weight. The Wall Street firm’s price target of $50 implies a 33.2% upside from Monday’s close.

To see more companies making moves in the premarket, read the full story here.

— Michelle Fox

Bill Ackman and Elon Musk are weighing in ahead of the Federal Reserve meeting this week, calling on the central bank not to raise interest rates.

In separate tweets, the two executives think it’s the wrong time to be tightening policy. Ackman was first to call for a cut, and Musk followed in a reply to the former’s tweet.

Pershing Square Holdings CEO Ackman cited the crisis in the banking industry as one of “a number of major shocks to the system … This is not an environment into which the @federalreserve should be raising rates and adding additional pressure on the system as financial stability is the Fed’s first responsibility.”

Musk replied by saying the “Fed needs to drop the rate by at least 50bps on Wednesday.”

However, neither sentiment appeared to be catching on in financial markets, as traders widely expect the Fed to approve its ninth interest rate hike over the past year.

Specifically, market were assigning an 83.4% chance of a 0.25 percentage point rate hike when the Federal Open Market Committee concludes its two-day meeting Wednesday, according to the CME Group’s FedWatch tracker.

—Jeff Cox

Harley-Davison advanced more than 3% before the bell after Morgan Stanley got off the sidelines.

Analyst Adam Jonas upgraded the stock to overweight from equal weight, citing success with focusing on the core brand. His price target of $50 implies the stock could rally 33.2% from where it closed Monday.

“We upgrade HOG to OW on confidence in the Hardwire strategy, ‘containment’ of electrification risks and attractive valuation,” Jonas said in a note to clients Tuesday.

CNBC Pro subscribers can click here to read more.

— Alex Harring

Foot Locker gained nearly 4% in premarket trading following an upgrade from Citi.

Analyst Paul Lejuez called new CEO Mary Dillon the “right leader for this moment” in a note to clients Tuesday.

He also upgraded the stock to buy from neutral and raised his price target by $3 to $50. Lejuez’s new price target implies the stock could rally 25.4% from where it closed Monday.

Lejuez said the company is moving in the right direction with its attention moving away from malls and Champs stores, instead focusing on kids, loyalty and digital offerings. CNBC Pro subscribers can read the full story here.

— Alex Harring

Treasury Secretary Janet Yellen said Tuesday that while authorities believe they’ve taken sufficient action to stem liquidity problems in the banking sector, the government is prepared to guarantee even more deposits if the banking crisis gets worse.

“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” she said in remarks prepared for a speech to the American Bankers Association. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

— Tanaya Macheel, Jeff Cox

The group of banks that injected roughly $30 billion in deposits to First Republic is now discussing options on how to help the beaten-down regional over the long term if a sale doesn’t come to fruition, sources told CNBC’s Kayla Tausche.

JPMorgan Chase CEO Jamie Dimon is leading discussions among the consortium of banks on contingency planning depending on what happens to the bank over the next 30-120 days, sources familiar with the matter told Tausche. These discussions concern whether the banks could infuse more capital or take over First Republic as a group.

To be sure, this outcome would only take place if there’s a failed sale process, sources also told Tausche.

— Fred Imbert

Shares of struggling First Republic jumped 15% in premarket trading as regional bank stocks looked to stage a comeback.

The SPDR S&P Regional Bank ETF (KRE) gained 3%, while Western Alliance Bancorp and KeyCorp gained more than 3%.

The moves come after a speech from Treasury Secretary Janet Yellen was released that said the government could backstop the deposits at more banks if there was risk of contagion.

— Jesse Pound

Morgan Stanley analyst Brian Nowak upgraded Meta Platforms to overweight from equal weight, saying the stock can rally more than 25% going forward.

“We are taking a more conservative approach with forward ad growth and if the consumer does weaken, we think META is better positioned than GOOGL (which hasn’t reduced costs as aggressively) and AMZN (where retail profitability improvement is partially predicated on growing consumer spend and macro uncertainty could push out the AWS growth improvements),” Nowak said in a note to clients Tuesday.

Meta shares gained more than 2% in the premarket.

Check out CNBC Pro for the full story.

— Alex Harring

Europe’s Stoxx 600 was up 0.8% shortly after the open, with banks shaking off recent worries to lead gains with a 1.85% rise.

With all sectors posting gains, auto stocks were up 1.25% and financial services rose 1.23%.

France’s CAC 40 was up 1.1% despite domestic turmoil after the government survived a vote of no confidence on Tuesday. Germany’s DAX was up 0.9%, while the U.K.’s FTSE 100 rose 0.7%.

— Jenni Reid

It’s not just regional bank shares that have been hit by the recent banking crisis — large-cap bank stocks have also tumbled.

But some analysts say the selloff is overdone.

Kenny Polcari, chief market strategist at SlateStone Wealth, described the pullback as “an opportunity for those that have a strong stomach,” referring to stocks such as JPMorgan, Bank of America, Citi and Wells Fargo.

For those looking to invest, CNBC Pro takes a look at what analysts are saying about JPMorgan Chase and Bank of America in particular.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Fears of contagion in the banking sector may have subsided with a rescue deal for Credit Suisse, but Goldman Sachs Chief Global Equity Strategist Peter Oppenheimer believes stocks are not out of the woods yet.

“Even if markets rebound from current levels in the short term, high uncertainty and lowered confidence levels are likely to mean an ongoing ‘fat & flat’ market given that valuations do not look particularly attractive,” he said.

Pro subscribers can read more here.

— Zavier Ong

Moody’s Investors Services affirmed its ratings of UBS Group AG while changing its outlook on the long term deposit and senior unsecured ratings from stable to negative.

The action comes after UBS agreed to acquire Credit Suisse for $3.2 billion as regulators look to shore up confidence in the global banking system.

“Despite the eventual franchise benefits, Moody’s also notes that the transaction poses significant financial, cultural and franchise related integration challenges for UBSG,” it said in the note.

Moody’s listed the need to retain Credit Suisse personnel in the process of the deal, working on minimizing losses on overlaps in clients in businesses and the need to unify the two companies’ cultures as the challenges that UBS would face.

It voiced more optimism for its wealth management business from the deal than its investment banking.

“Moody’s believes that the acquisition of CSG has the potential, in due course, to significantly enhance UBSG’s franchise in wealth management, Swiss banking, asset management and to a lesser degree in investment banking, whilst targeting a reduction of operating costs by more than  $8 billion,” it said.

– Jihye Lee

Japan’s foreign ministry confirmed that Prime Minister Fumio Kishida is visiting Ukraine.

“As the G-7 [chair], Prime Minister Kishida will directly convey our solidarity and unwavering support for Ukraine,” a statement from the ministry said.

Kishida will visit Poland on Wednesday after his trip and return to Japan on Thursday, the ministry said.

Japan’s prime minister left India after meeting his counterpart there, Narendra Modi. The two leaders discussed stronger ties between their countries — both of them democracies — in the face of rising assertiveness from China in the Indo-Pacific region.

Last month, Ukraine’s ambassador to Japan told CNBC he was optimistic Kishida would visit Ukraine before hosting the G-7 Summit in Hiroshima in May.

– Jihye Lee

Billionaire investor and Pershing Square CEO Bill Ackman said the U.S. Federal Reserve should pause its interest rate hikes, as the Federal Open Market Committee meeting kicks off Tuesday.

Noting that markets have seen “major shocks” with the closures of U.S. banks, Ackman said the banking crisis “remain unresolved” and that higher rates will not help with the situation.

“This is not an environment into which the @federalreserve should be raising rates and adding additional pressure on the system as financial stability is the Fed’s first responsibility,” he said in his tweet

– Jihye Lee

The Federal Reserve is in a difficult position headed into this week’s policy meeting, according to Victor Masotti, director of repo trading at Clear Street.

“The Fed is truly stuck between a rock and a hard place as they try to manage more than just their two mandates of inflation and employment, with consumer banking confidence deteriorating,” Masotti said.

While most on Wall Street still expect a 25-basis-point rate increase, Goldman Sachs said Monday that it expects the central bank to take a pause to “avoid worsening market fears of further banking stress.”

— Yun Li

Markets have yet to price in a recession, and that could mean stocks take a big leg lower from here, according to Cantor Fitzgerald’s Eric Johnston.

“I think almost no chance has been priced in, and I say that based on the numbers,” the head of equity derivatives and cross asset told CNBC’s “Closing Bell: Overtime” on Monday. “Right now the market is trading at 18 times the earnings estimates that we see in print, which if we were to have a recession, the numbers would be far lower …”

The rate market, he added, appears to be signaling that a recession is coming much sooner than investors anticipate, which could spell bad news for equities going forward.

While it’s difficult to time the exact bottom of a market, Johnston said now is a good time for investors to sell equities, and get into cash and money market funds for liquidity.

“If we were to get a move lower, you want to be able to be nimble, to take advantage of that equity selloff, he said.

Johnston is negative on cyclicals, which he called one of the “last places you want to be” heading into a downturn.

— Samantha Subin