(CercleFinance.com) – After its sharp decline the day before, the New York Stock Exchange is struggling to stabilize, investors having to digest both the turmoil shaking the banking sector and employment figures much higher than expected .
At the end of Friday’s session, the Dow Jones index dropped 1.07%, while the Nasdaq Composite lost 1.76%.
Despite everything, the financial sector manages to limit its decline, while a good number of analysts assure that the system is solid enough to face the implications of a possible bankruptcy of SVB.
According to several market sources, the Silicon Valley Bank (SVB) has failed to launch a capital increase in order to bail itself out and is currently favoring the scenario of an outright sale to a rival.
Over the week as a whole, the Dow Jones has so far fallen by 4.5% while the Nasdaq has dropped 4.6%.
This slide shows that investors are ready to take profits quickly amid nervousness over fears of further Fed monetary policy tightening.
The announcement of the creation of 311,000 non-agricultural jobs in February in the United States suggests that the labor market remains dynamic, an element likely to favor further rate hikes.
Added to this is the prospect of an increasingly visible slowdown in the global economy, which is also likely to fuel risk aversion.
A sign of market nervousness, the CBOE volatility index jumped more than 10% to flirt with 25 points, the highest since the end of 2022.
Eight of the 11 S&P sector indices are in the red, the rare segments to come out of the water being non-essential consumption (+0.8%), energy (+0.5%) and health (+0.2%).
The fears inspired by a possible domino effect following the difficulties of SVB nevertheless lead some investors to consider a more benevolent posture on the part of the Fed at its next meetings.
On the bond front, Treasuries are playing their role of safe bet in the face of the turbulence in equities, with the yield on 10-year paper falling to 3.68% against more than 4% a week ago.
As for values, Caterpillar dropped 5.8% in the wake of a downgrade to ‘sell’ on the advice of UBS analysts.
Oracle yields more than 3% despite results marked by analysts with a ‘solid’ momentum in the cloud and prospects deemed ‘impressive’.
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