Despite the banking crisis, the S & P 500 is actually higher than it was the day before Silicon Valley Bank’s troubles dragged the banking sector down. The index is up 0.3% from the close on March 8 through Tuesday’s close. Meanwhile, the SPDR S & P Regional Banking ETF has lost about 20% in that same time frame. On Thursday, March 9, shares of SVB plunged by 60% after the company announced a plan to raise more cash to help offset losses on bond sales. The next day the bank was shuttered by regulators . In the wake of the collapse, the banking sector fell as investors became concerned about the balance sheets of other regional banks, as well as the health of Credit Suisse ‘s finances. “All of those things in another time, in a weaker market environment, would have pushed us much lower than we have seen,” said Art Hogan, chief market strategist at B. Riley Wealth Management. In fact, the S & P hit a closing low during the crisis on March 13 and is now up 3.8%, said Sam Stovall, chief investment strategist at CFRA Research. All 10 of the 11 sectors are in positive territory; the only one that slipped was real estate, he said. The biggest winners were technology and communication services. The Technology Select Sector SPDR Fund gained 3.2%, and the Communication Services Select Sector SPDR Fund rallied 4.09%. Consumer discretionary, health care and consumer staples are also among the best performers since March 8. XLC mountain 2023-03-08 Communication Services Select Sector SPDR Fund since 3/8/23 “One of the biggest enigmas in the recent market reaction to banking system stress is the resilience in US equities alongside sharp declines in market pricing of the policy rate path and in oil prices,” Goldman Sachs analyst Dominic Wilson wrote in a note Wednesday. There are a few reasons for the move, experts said. When investors fled to the safety of bonds as the crisis hit, that brought down Treasury yields — and that typically bodes well for technology stocks, said Dan Eye, chief investment officer at Fort Pitt Capital Group. “Investors are anticipating that the stress in the banking system is going to result in tighter lending standards and that will bring inflation down, which is a big benefit for technology and growth in general,” he explained. Crisis causes Fed to ‘grip the wheel’ The bank crisis is also seemingly affecting the Federal Reserve ‘s policy of raising interest rates, experts said. “What the bank drama has done is significantly changed our perception of monetary policy,” Hogan said. Just days before the crisis, Federal Reserve Chairman Jerome Powell told Congress that interest rates are likely to head higher than the central bank had expected. That caused the market to recalibrate its views on rate hikes , going from expectations of a 25 basis point hike in March and a terminal rate around 5.25% to most observers strongly expecting a half-point increase and an end point closer to 5.75%. Yet on Wednesday, the Fed announced a 25 percentage point increase , while expressing caution about the banking crisis. “The banking crisis basically caused the Fed to grip the wheel with two hands and take a more cautious approach to its rate tightening policy,” Stovall said. Policymakers responding so quickly by backstopping deposits at SVB and larger banks coming to the aid of troubled institutions also restored confidence, Hogan said. “That has gone a long way to restoring a more risk-on attitude towards markets,” he said. He also believes that now that some time has passed, the market is looking at the crisis as more idiosyncratic to those troubled banks than a sweeping problem with all regional banks. Larger companies spared in credit crunch Another possibility for the market’s action is the view that a significant credit crunch is likely, with large impacts on growth, but the impact will be heavily concentrated on smaller businesses, Goldman Sachs’ Wilson said. “Other areas of the economy, including larger companies who may maintain access to bank credit and public markets (and perhaps consumer relative to commercial borrowers) might then escape with less negative impacts,” he said. This explanation was one of three possibilities that Wilson laid out in his note and was the one he sees as best matching the current market footprint. The others, which may have also played a role, were the Fed easing enough to entirely offset the potential growth impact of any credit restraints, and a large disconnect between equities, oil prices and Treasury rates. “The move in rates looks superficially consistent with a large shift in growth, as does the pricing of Fed cuts as soon as June. Moves in front-month oil prices—which we think normally disproportionately reflect near-term growth outcomes—are also what you would expect with that kind of growth downside,” Wilson said. “Equity indices do not appear consistent with the same kind of downside to growth.” However, despite the recent “risk on” rally, Wolfe Research is sticking with its intermediate-bearish term case. “In our view, inflation is even more likely to remain ‘sticky’, the Fed is likely to be much tighter than consensus expects, and we now expect the upcoming downturn to be even more protracted,” Wolfe analyst Chris Senyek wrote in a note Wednesday. — CNBC’s Michael Bloom and Jeff Cox contributed reporting.