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Wednesday, March 22, 2023

Wall Street held on to possible rate dovishness and cushioned the slide

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Wall Street It ended unevenly this Monday, March 13, affected, on the one hand, by theto investor uncertainty after the collapse of Silicon Valley Bank and, on the other, given some expectation that the Fed will moderate the rate hike.

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The Industrial Average Dow Jones it fell 86.66 points, or 0.3%, to 31,822.08; the index S&P 500 it lost 5.82 points, or 0.2%, to 3,855.54; he nasdaq Composite gained 49.74 points, or 0.4%, to 11,188.63 units.

The sudden collapse of SVB Financial on Friday, following a failed capital increase, raised concerns about the risks posed to other banks by the Fed’s rate hike cycle.

Many speculated that the central bank could now become less aggressive, with the two-year Treasury yield plunging.

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During the weekend, regulators intervened to restore investor confidence in the banking system, stating that SVB depositors will have access to their funds on Monday.

For some investors, the Fed’s decision next week will also depend on inflation data due this week.

“If we get surprisingly bad Consumer Price Index and Producer Price Index, the Fed is going to be in a tough spot or a lot tougher than even before,” Orion Advisor Solutions CIO Timothy Holland said. The CPI and PPI data will be released on Tuesday and Wednesday, respectively.

The benchmark S&P 500 is up 1% year to date. Earlier in the session it fell, briefly erasing all year-to-date gains.

The price of Signature Bank, closed by regulators on Sunday, has been discontinued. Nasdaq said it would stay that way until the exchange’s request for more information was “fully satisfied.”

Shares of large US banks, such as JPMorgan Chase & Co, Citigroup and Wells Fargo, lost ground.

Joe Biden’s word in the midst of the crisis

President Joe Biden assured Americans on Monday that their banking system “is safe” and their deposits will be available “when they are needed”, after the bankruptcy of Silicon Valley Bank and Signature Bank, which threatened to trigger a broader crisis.

In statements from the White House, Biden added that US taxpayers will not bear the bank’s losses and that he will ask Congress to “strengthen” regulation of the banking sector.

Biden hinted at new regulation of big banks in the wake of America’s biggest bank failure since the 2008 financial crisis, but he faces a divided Congress that is unlikely to pass tougher new rules.

Source: Ambito

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