The Dow Jones New York Stock Exchange ended lower on Monday (March 13), with banking stocks tumbling sharply. Because investors are concerned that The bankruptcy of Silicon Valley Bank (SVB) will weigh on the stability of the banking system, however, the Nasdaq closed in positive territory, supported by expectations that the Federal Reserve may no interest rate hike at this month’s meeting
The Dow Jones Industrial Average closed at 31,819.14 points, down 90.50 points or -0.28%, the S&P 500 closed at 3,855.76 points, down 5.83 points or -0.15%, and the Nasdaq closed at 11,188.84 points, up 49.96 points or +0.45%.
The US government ordered the shutdown of SVB last Friday. After the stock price of SVB collapsed heavily. Amid concerns that SVB may have to raise substantial capital to offset huge losses from the sale of US Treasury bonds, SVB has had to sell bonds at below face value. Because bond prices fell against the rising interest rates following the Fed policy. Meanwhile, technology startups, which are SVB’s key customer base, are affected by high interest rates. and withdrew deposits from SVB
However, the US Treasury Department and the Fed unanimously issued crisis relief measures on Tuesday, saying that people who deposited money at the SVB and Signature Bank, which had also been ordered to close, were also out of business. Deposits can be accessed in full from Monday 13 March onwards. Meanwhile, the Fed announced the creation of a “Bank Term Funding Program” aimed at protecting financial institutions from the effects of the SVB bankruptcy.
Investors weighed more than 50% on expectations that the Fed will not raise interest rates at this month’s meeting. Following the collapse of SVB, it was the biggest crisis for the US banking sector since Lehman. Brothers went bankrupt in 2008, with the latest CME Group’s FedWatch Tool indicating that investors weighed 54.2% that the Fed would hold interest rates at 4.50-4.75% at its March 21-22 meeting after Previously, investors had not weighed in on such expectations.
Shares of First Republic Bank (FRB) sank 61.83% as investors worried that the SVB’s collapse would hurt banking stability. By spreading to US regional banks, including FRB, although FRB has a different policy than SVB, which is a bank that focuses on lending to startups in the technology sector.
Other bank stocks also plummeted. Goldman Sachs was down 3.71%, Wells Fargo was down 7.13%, JPMorgan was down 1.8% and Morgan Stanley was down 2.32%.
However, investors buy defensive stocks, which are safe stocks that can withstand economic cycles well. Such as utilities and consumer goods, with Duke Energy stocks up 1.44%, Procter & Gamble stocks gaining 0.71%, and Kimberley-Clark stocks gaining 0.61%.
Technology stocks rallied and supported the Nasdaq, with Alphabet shares up 0.53%, Apple shares up 1.33%, Meta Platforms up 0.77% and Microsoft shares. T rose 2.14%.
Investors keep an eye on the US release of the Consumer Price Index (CPI), which measures inflation on consumer spending. February month today While analysts expect the headline CPI, which includes food and energy, to will rise 6.0% in February year on year. That’s slower than 6.2 percent in January, and core CPI excluding food and energy is expected to rise 5.5 percent year on year. This slowed from 5.6% in January.