NEW YORK: Shares of US lenders endured another walloping on Wednesday (March 15) on worries of more bank failures, although the Nasdaq eked out a gain following assurances from the Swiss central bank about Credit Suisse.
“I’m getting the sense it’s very emotional trading,” said Cresset Capital’s Jack Ablin. “So investors are on high alert for any news that could be disappointing or just anything particularly related to the banks.”
Major indices spent most of the day deep in the red, but the Nasdaq popped into positive territory at the end of the day after the Swiss National Bank said Credit Suisse had adequate capital, but that it was ready to make liquidity available to the institution if needed.
The statement came after the shares of the giant bank closed down nearly 25% on the Swiss exchange.
“The bounce back yesterday (Tuesday) in financial stocks, the banks, made sense, but sort of an overriding factor here is a loss of confidence and it’s really fear of the unknown,” said Adams Funds CEO and senior portfolio manager Mark Stoeckle.
The Dow Jones Industrial Average fell 280.83 points, or 0.87%, to 31,874.57, the S&P 500 lost 27.36 points, or 0.70%, to 3,891.93 and the Nasdaq Composite added 5.90 points, or 0.05%, to 11,434.05.
“We are seeing movement on the headlines but not severe headlines which is good. ... I don’t think we are at 2008-2009 stages by any means when it comes to the contagion stuff,” said Themis Trading co-manager of trading, Joe Saluzzi.
Worries about Credit Suisse afflicted US banks of all sizes, with giants like JPMorgan Chase and Citigroup losing around 5% and the embattled midsized lender First Republic Bank slumping 21.4%.
Shares of Western Alliance Bancorp and bank and brokerage Charles Schwab Corp bucked the trend to close up 8.3% and 5%, respectively. Both stocks reversed early declines.
Anxiety about the banks overshadowed US economic data that suggested a slowing economy that could ease pressure on the Federal Reserve (Fed) next week.
US wholesale prices fell unexpectedly last month, while retail sales also contracted, driven by declines in sales at department and furniture stores.
The data has contributed to the investor view that the Fed could pause its interest rate increases next week.
Some investors believe aggressive US interest rate hikes by the Fed caused cracks in the financial system.
“They’ve tightened at the steepest, most dramatic rate that we’ve seen since 1980 and so I think this could be the opportunity for them to pause,” said Cresset Capital CIO, Jack Ablin.
Among other stocks, petroleum-linked shares fell sharply as US oil prices finished at their lowest level since December 2021 amid recession worries. Chevron dropped 4.3% and Halliburton and Transocean both slumped around 9%. – AFP, Reuters
Source: The Sun Daily
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