NEW YORK: US markets closed mixed on Monday (March 27), as US regional bank stocks responded positively to the announcement that First Citizens Bank had bought large chunks of failed lender Silicon Valley Bank (SVB).
Shares of First Citizens ended the day up more than 50% after US regulators announced that it purchased about US$72 billion (RM310.6 billion) of SVB’s assets at a discount.
The Dow Jones Industrial Average rose 194.55 points, or 0.6%, to 32,432.08, the S&P 500 gained 6.54 points, or 0.16%, to 3,977.53 and the Nasdaq Composite dropped 55.12 points, or 0.47%, to 11,768.84.
“Investors appear to be getting over the banking turmoil that we’ve been living with over the last couple of weeks,” Cresset Capital’s chief investment officer, Jack Ablin, told AFP.
Regional lenders were buffeted by the collapse of SVB, as nervous investors dumped shares of smaller banks over concerns over their resilience in the face of depositor withdrawals.
The Federal Deposit Insurance Corporation, which shuttered SVB and is now overseeing the sale of its assets, said the deal with First Citizens covers all of SVB's deposits and loans but not its securities and other assets.
The announcement calmed under-fire regional lenders including First Republic Bank and KeyCorp, which both closed higher on Monday, reversing some recent losses.
The S&P 500 banks index rose 3.1%, while the KBW regional banking index ended up 0.6%.
JPMorgan Chase & Co shares climbed 2.9% and Bank of America added 5%. They were among stocks giving the S&P 500 its biggest boost on Monday.
Also, shares of First Republic Bank were up 11.8% after Bloomberg reported US authorities were considering more support for banks, which could give the struggling First Republic more time to shore up its balance sheet.
“There’s still a lot going on in the financial sector, and it’s actually good news today,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
But tech and growth stocks have “had a very strong quarter, so there may be some profit-taking as we head into the end of the quarter.”
Shares of Apple were down 1.2%. The S&P 500 technology index is up more than 16% for the quarter so far.
Among other stock gainers, Walt Disney shares ended up 1.6% after the company began 7,000 in layoffs announced earlier this year. – AFP, Reuters
