The floor of the New York Stock Exchange (AFP/TIMOTHY A. CLARY)
The New York Stock Exchange ended higher on Monday, driven by a hunt for bargains amid a lull after ten days of banking turbulence, although uncertainty remains over the outcome of the crisis.
The Dow Jones rose 1.20%, the Nasdaq index gained 0.39% and the broader S&P 500 index rose 0.89%.
After several massive interventions to reassure depositors of American banks and the announcement on Sunday of the takeover of Credit Suisse by its great rival UBS, Wall Street entered Monday’s session with less tense nerves.
“In 2008, we had Lehman (Brothers), which had not found a buyer and had caused a fall” in the markets, recalls Andy Kapyrin, of Regent Atlantic. “This time we didn’t have any. And I think the market breathes a sigh of relief that nothing more serious has happened.”
On Monday, the VIX index, which measures market volatility, fell sharply.
In free fall last week, bond yields recovered, thanks to a gradual return of risk appetite. Investors thus sold US Treasury bonds, assets considered safe, driving down their prices and raising their rates, which moved in the opposite direction.
The yield on 2-year US government bonds, much more volatile than the 10-year rate, rose to 3.96%, against 3.83% on Friday at the close.
But all the lights are not green and operators have closely observed the new fall of First Republic (-47.11%), considered the weak link in the American banking system at the moment.
“It’s too early to say it’s all over,” warned Andy Kapyrin. “People are going to keep worrying until this is all gone. But in the meantime, “the market offered opportunities today, with lower valuations,” the analyst explained.
With the exception of First Republic, bargain purchases have primarily benefited the banks.
Among the most popular regional establishments, First Citizens (+10.47%), based in Raleigh (North Carolina), Fifth Third (+5.05%), from Cincinnati (Ohio) or the Californian PacWest (+10, 78%).
The little-known group New York Community Bancorp (NYCB) soared (+31.65%) after the announcement on Sunday of the takeover of part of the loan and deposit portfolio of its competitor Signature Bank, in bankruptcy. The assets will be housed within Flagstar Bank, a subsidiary of NYCB.
A few big names in the market like JPMorgan Chase (+1.06%) and Goldman Sachs (+1.93%) also rode the wave.
Also very badly treated last week, energy stocks have taken over, such as ExxonMobil (+2.61%) or Marathon Oil (+2.55%).
Conversely, after having shone during the banking crisis, the technology sector was the subject of some profit-taking on the most prominent stocks last week, namely Microsoft (-2.58%) and Alphabet ( -0.52%).
Amazon also ended in the red (-1.25%), after announcing the elimination of 9,000 additional positions, in addition to the 18,000 layoffs already decided at the start of the year, mainly attributed to the uncertain economic situation.
Elsewhere on the stock exchange, the listed vehicle Digital World Acquisition (+10.96%), which is to merge with Donald Trump’s media group, had a start as the former president could be charged imminently.
Excluding opportunity purchases, Wall Street remained wait-and-see, as “uncertainty remains about whether the turbulence in the banking sector will influence the decision of the Fed (US central bank) on Wednesday”, commented , in a note, analysts at Schwab.
Operators are mainly counting on a quarter-point increase in the Fed’s key rate, and do not rule out a new equivalent increase at the May meeting.
© 2023 AFP
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