What was announced is that First Citizens BancShares Inc will acquire part of Silicon Valley Bank, which plunged earlier this month into the biggest bank failure since the 2008 financial crisis, sparking fears about liquidity problems in the sector.
In that context, the Dow Jones thus gained 0.61%the technological Nasdaq fell 0.47% and the expanded index S&P 500 rose 0.17%.
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The actions of First Citizens shot up 53.74%, while those of First Republic Bank gained 11.81% after learning that the US authorities are studying the possibility of granting more aid to banks, which could give the embattled regional lender more time to shore up its balance sheet.
“The news about the SVB purchase could calm the nervousness in the banking sector,” said Randy Frederick, of Charles Schwab. And he assured that “every bank in which the FDIC (Federal Deposit Insurance Corporation) is involved and that it is resolved in such a way that people do not lose money adds another element of confidence to the sector”. In this context, he assured that it is to be expected that people will calm down.
Regional entities Western Alliance Bancorp and PacWest Bancorp also improved in the day 3.03% and 3.46%, respectively.
While the shares of major US banks they also tended upward. JPMorgan Chase & Co. went up 2.87%, Citigroup got better 3.87% and Bank of America advanced 4.97%.
The KBW Regional Banking Index rose 3.49%, while the S&P Banking measure gained more than 3%.
Thus, the effect of the bailouts on the dynamics of the stock market is observed, especially in the actions of the financial sector.
Source: Ambito
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