Stocks rose as regulators around the world rushed to bolster market confidence, with recent financial turmoil fueling speculation about a slower pace of tightening from major central banks.
An earlier flight-to-safety bid faded, with all 11 S&P 500 groups gaining. Following last week's 15% drop, a measure of US lenders rose. First Republic Bank fell after another credit downgrade, missing out on a rebound led by New York Community Bancorp. UBS Group AG rose as investors focused on the potential benefits of its acquisition of Credit Suisse Group AG.
Following the Nasdaq 100's biggest weekly gain since November, the tech-heavy index underperformed as risk appetite returned, sending Treasuries lower. There was no rush for dollars after global central banks joined forces with the Federal Reserve to ease access to US currency supplies, indicating that the latest bout of banking turmoil may not be putting undue strain on the financial system.
Just a few weeks ago, investors expected the Fed to raise rates near 6% and the European Central Bank to raise rates above 4%. Markets now believe the tightening cycle is nearing its end and predict four rate cuts in the United States by the end of the year. The Fed is expected to raise interest rates by a quarter-point this week, according to overnight indexed swaps.