US stock markets slide
Bank failure shakes US financial sector
03/10/2023 11:21 p.m
The collapse of the Silicon Valley Bank (SVB) is raising concerns among US investors about the stability of the banking sector. The prices of most major financial institutions crash and pull the leading US indices into the red. On the other hand, the latest wage development data at least alleviate the interest rate concerns of traders on Wall Street.
The collapse of the US start-up financier SVB sent shockwaves through the banking sector on Friday. The prices of the big money houses on Wall Street collapsed massively at times, as investors feared latent risks in the balance sheets. The Dow Jones Index the standard values lost 1.1 percent to 31,909 points. The broader one S&P 500 fell by 1.5 percent to 3861 points. The index of the technology exchange Nasdaq fell 1.8 percent to 11,138 points. On a weekly basis, the Dow was down 4.4 percent, the S&P was down 4.5 percent and the Nasdaq was down 4.7 percent.
The Silicon Valley Bank (SVB) was closed by a California regulator on Friday following massive price falls. According to insiders, an emergency capital increase that had become necessary after billions in losses from the sale of a bond portfolio had previously failed. It is the largest US bank failure since the financial crisis. Trading in the papers of the institute, which promotes tech companies and start-ups, was suspended from trading on Friday. On Thursday they had lost around 60 percent, pre-market losses of a similar amount had been announced.
Fears of widespread problems in the financial sector dragged down shares in the major US institutions. “Many banks hold large portfolios of bonds and rising interest rates make them less valuable. The SVB situation is a reminder that many institutions are sitting on large unrealized losses on their fixed income holdings,” said Russ Mold, investment manager at AJ Bell.
The titles of Goldman Sachs fell by a good four percent, MorganStanley lost two percent and Bank of America almost one percent. The shares of JPMorgan on the other hand, turned two percent into the plus after the intervention of the regulators. Some analysts had described the price decline in the sector as exaggerated. SVB’s problems are “too specific to generalize to everyone,” said Ebrahim Poonawala, an analyst at Bofa Securities in New York.
Job data ease interest rate worries
Weakened wage growth at least eased inflation worries and investors’ fears of further large interest rate hikes by the US Federal Reserve on Friday. In February, US nonfarm payrolls added 311,000 jobs, down from a revised 504,000 in January. Monthly wages rose at the lowest rate in 12 months. Traders were pricing in a less than 40 percent chance of a 50 basis point rate hike by the Fed this month, compared to a 50 percent chance earlier.
That made him dollar to accomplish. In return, he put Euro up 0.6 percent to $1.0639. The yield of ten-year US bonds dropped to just under 3.70 percent.
On the stock market, investors made the US shoe manufacturer after a disappointing outlook for the first quarter Allbirds Cash. Shares fell 47 percent to $1.25. According to Allbirds, revenue will be in the range of $45 million to $50 million. Analysts polled by Refinitiv had expected $51.83 million on average.
An unexpectedly high quarterly loss sent the stocks from gap downhill. The shares of the US fashion chain fell by around six percent. The company reported a loss of 75 cents per share for the fourth quarter. Analysts had only expected a minus of 46 cents.