Wall Street's favorite volatility gauge fell as the stock market's rebound deepened, with a surge in banks and assurances from global authorities allaying fears that the recent financial turmoil would lead to a full-fledged crisis.
In any case, the coordinated actions to resolve the banking turmoil have restored some semblance of order for the time being. The market's so-called fear gauge, or VIX, was on track for its biggest two-day drop since May. Traders are betting on another 25 basis-point hikes in the run-up to the Federal Reserve decision, with officials pushing ahead with the fight against inflation and signaling a commitment to financial stability.
The S&P 500 surpassed 4,000, extending its rally above the important 200-day moving average. The Cboe Volatility Index fell to around 22 after briefly exceeding 30 last week for the first time since October. Every stock in a benchmark index of US financial heavyweights rose. First Republic Bank surged 30%, its best day ever, on optimism about a new plan in the works to help the regional lender.
