PacWest Bancorp slumped nearly 50% to a record low after confirming it was exploring strategic options, including a sale. Meanwhile, Apple falls 1% on the eve of the presentation of quarterly results.
The main indices of Wall Street fell on Thursday, after PacWest’s decision to explore strategic options heightened concerns about the health of regional banks, offsetting optimism generated by the Federal Reserve, which signaled a probable pause in interest rate hikes.
PacWest Bancorp slumped nearly 50% to a record low after confirming it was exploring strategic options, including a sale, after shares of the regional lender and its peers hit on fears of a worsening banking crisis. .
Thus, the S&P 500 index lost 34.59 points, or 0.85%, to 4,056.16 units; while the Nasdaq was down 77.36 points, or 0.64%, at 11,947.96 units. Meanwhile, the Dow Jones Industrial Average fell 356.00 points, or 1.07%, to 33,058.24. Shares of Apple Inc fell 1.4% on the eve of its quarterly earnings presentation after the close of the day.
Regulators seized First Republic Bank and JPMorgan Chase agreed to buy most of its assets earlier this week, marking the biggest U.S. bank failure since the 2008 financial crisis.
Canada’s Toronto-Dominion Bank on Thursday canceled its $13.4 billion acquisition of First Horizon Corp, sending shares of the US regional bank tumbling 37.9%.
Regional lenders including KeyCorp, Valley National Bancorp and Zions Bancorp were down 4.9-5.9%, while Western Alliance Bancorp was down 17.9%.
“PacWest is further proof that the US banking crisis is not over yet,” said Stuart Cole, chief macroeconomist at Equiti Capital. “It looks like it’s struggling, and I’d be very surprised if it wasn’t for the same reasons as above…the market is circling all these regional banks like a vulture, looking for the next one.”
On Wednesday, The Federal Reserve raised interest rates by 25 basis points to the 5.00-5.25% range and signaled a pause in its monetary tightening, giving officials time to assess recent bank failures, the state of the debt ceiling and persistent inflation.
But Wall Street fell after Fed Chairman Jerome Powell said it was too soon to say with certainty that the rate hike cycle was over as inflation remains the top concern.
Source: Ambito
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