Dow rallies more than 1,000 points in two days as fear begins to fade

New York
CNN business

Is the worst really over on Wall Street? It’s too early to tell. But stocks rallied again Tuesday morning after Monday’s big rally.

It looks like the market bears may be going into hibernation, at least temporarily. Even news of North Korea firing a missile over Japan wasn’t enough to keep the bulls from celebrating.

The Dow rose more than 380 points, or 1.3%, shortly after the opening bell. The Dow is up more than 1,000 points in the past two days. It is now back near the 30,000 key mark and is about 19% off its record, meaning it is no longer on the market.

The S&P 500 and Nasdaq gained 1.6% and 2.2% respectively. But both indexes remain in bear territory, more than 20% above their all-time highs.

Market sentiment has improved on renewed hope that banking giant Credit Suisse ( CS ) will avoid a financial disaster similar to that of Wall Street firm Lehman Brothers 14 years ago.

There have been growing fears that Credit Suisse is in serious trouble. But the bank’s share price has risen in the past two days and the cost of securing Credit Suisse’s bonds has also fallen. That’s a sign that investor anxiety about the bank’s future has eased somewhat.

A smaller-than-expected rate hike by the Reserve Bank of Australia also lifted spirits on Wall Street. Central banks around the world are raising rates to fight inflation. But economic and market uncertainty could lead the Federal Reserve and other banks to slow the pace of rate hikes.

The concern is that too aggressive a rate hike could lead to a major recession. CEOs surveyed by KPMG US predict a downturn in the next 12 months and are concerned that it will not be mild or short-lived.

But bond investors are now pricing in the possibility that the Fed will pull back on rate hikes. The yield on the benchmark 10-year US Treasury, which briefly rose to 4% and hit its highest level since 2008 last week, has fallen and is now below 3.6%.