Stocks close higher Friday as investors try to shake off latest bank fears: Live updates

Stocks close higher Friday as investors try to shake off latest bank fears:

The U.S. stock market ended the week on a positive note, as investors shrugged off the latest concerns about the financial sector and focused on the economic recovery. The Dow Jones Industrial Average rose 0.7%, the S&P 500 gained 0.8%, and the Nasdaq Composite added 1%. All three major indexes posted weekly gains of more than 2%.

The market was buoyed by upbeat data on consumer spending, personal income, and inflation, which suggested that the economy was rebounding from the pandemic-induced slump. The Commerce Department reported that consumer spending rose 1% in February, while personal income surged 10% thanks to the stimulus checks. The core personal consumption expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation, increased 0.1% month-over-month and 1.4% year-over-year, below the Fed’s 2% target.

However, investors also had to contend with some negative news from the banking sector, as several major lenders announced that they were facing losses from a hedge fund default. Archegos Capital Management, a family office run by former Tiger Management trader Bill Hwang, failed to meet margin calls from its prime brokers, triggering a fire sale of its holdings in several media and tech stocks. Credit Suisse and Nomura warned that they could incur “significant” losses from the episode, while Goldman Sachs and Morgan Stanley also reportedly liquidated some of their positions.

Despite the potential fallout from the hedge fund debacle, analysts said that the overall outlook for the banking sector remained positive, as banks were expected to benefit from higher interest rates, stronger loan demand, and lower credit losses. They also noted that the Archegos situation was unlikely to pose a systemic risk to the financial system, as it was an isolated case of excessive leverage and poor risk management.