Hopes that the U.S. could escape a recession seemed to be dashed earlier in March with the two biggest banking failures since 2008. But the financial system has so far held firm, and in the long run, the trauma of the banking collapses may even help return the economy to growth and lift the stock market.
The S&P 500 has been mired in bear market territory since last year, weighed down by nine interest rate hikes to combat inflation and the recent banking crisis. But the failures of Silicon Valley Bank and Signature Bank this month could make the Federal Reserve stop its interest rate hikes, and possibly spark a 14% rally in stocks by year’s end, according to Ed Yardeni, president of Yardeni Research and long-time investment strategist.
