NEW YORK: Wall Street equities were mixed on Monday (March 13) at the end of a volatile session as several midsized banking stocks suffered another punishing sell-off amid worries of contagion.
The Dow Jones Industrial Average fell 90.5 points, or 0.28%, to 31,819.14, the S&P 500 lost 5.83 points, or 0.15%, to 3,855.76 and the Nasdaq Composite added 49.96 points, or 0.45%, to 11,188.84.
The session came on the heels of emergency announcements on Sunday night from US federal bank regulators to guarantee all deposits at Silicon Valley Bank and Signature Bank after the entities were seized by US officials.
Regulators also added measures to ensure that banks have adequate liquidity in a bold action designed to avert other bank runs and strengthen the US system.
But big declines in other midsized banks disconcerted investors. First Republic dropped around 62%, KeyCorp plunged 27.3% and Zions Bancorp dropped 25.7%.
“No one is convinced we’ve seen the last of this,” as far as problem banks, said Briefing.com analyst Patrick O’Hare.
“It’s a ‘sell first ask questions later’ market,” he said, adding that Monday’s gains by Apple, Microsoft and other larger stocks showed a defensive inclination among investors to stick with reliable companies.
To that end, yields on US Treasury bonds retreated in a flight to safety as investors bet the Federal Reserve will pivot from its hawkish effort to counter inflation.
But O'Hare said the Fed could face a difficult balancing act as soon as Tuesday with the release of key price data. If inflation remains elevated, the Fed will still feel pressure to raise interest rates later this month.
“If we get shockingly bad Consumer Price Index and Producer Price Index, the Fed is going to find itself in a tough spot or a much tougher spot that it even finds itself in ahead of those prints,“ said Orion Advisor Solutions CIO Timothy Holland.
The CPI data is due on Tuesday and PPI on Wednesday.
“The market is now expecting that the Fed is likely to not raise rates this month and so they may enter a pause period,“ said Peter Cardillo, chief market economist at Spartan Capital Securities.
Shares of SVB’s peer Signature Bank, which was also shut down by regulators, were halted. Nasdaq said they would remain so until the exchange’s request for additional information was “fully satisfied.”
Among individual companies, biotech company Seagen jumped 14.5% after it reached an agreement to be acquired by Pfizer for US$43 billion. Pfizer advanced 1.2%. – AFP, Reuters
