Tags: financial markets

Wall Street Sinks on Jitters About Banks, Jobs

Wall Street Sinks on Jitters About Banks, Jobs
(AP)

Friday, 10 March 2023 04:31 PM EST

Wall Street's indexes closed lower Friday as investors ran for the exits stressing out about the health of U.S. banks after regulators had to close a high-profile lender to the technology sector, overshadowing the February jobs report.

California banking regulators said they closed SVB Financial Group to protect deposits in the largest bank failure since the financial crisis. A capital crisis at SVB had already put pressure on bank stocks globally.

SVB had tried but failed to shore up its balance sheet through a stock sale proposed late on Wednesday. The same day, crypto-lender Silvergate Capital said it would have to wind down after huge losses from the FTX cryptocurrency exchange collapse.

"There's concern cracks may be appearing in the financial system as a result of the Federal Reserve's aggressive rate hikes," said Carol Schleif, chief investment officer, BMO family office in Minneapolis. "The fear is whether it's broader than one industry's bank and one segment of the economy."

While many investors were looking through their bank holdings for signs of risk, Schleif said much of the weakness in regional bank stocks stemmed from a "proverbial shoot first ask questions later situation."

The KBW regional banking index and the S&P 500 financials index were under pressure throughout the session.

The S&P 500 lost 1.45%, to end at 3,861.59 points, while the Nasdaq Composite lost 1.76%, to 11,138.89. The Dow Jones Industrial Average fell 345 points, or 1.07%, to 31,909.64.

Investors had expected to be more focused on economic data than bank stocks. Before the market opened the non-farm payrolls report showed the U.S. economy added more jobs than expected in February while average hourly earnings rose 0.2% last month after gaining 0.3% in January and unemployment rose to 3.6%.

The data had eased concerns that the Fed could raise rates by 50 basis points at its March meeting after hawkish remarks from Fed Chair Powell this week,

But investors were more focused on uncertainties around the bank system, said John Praveen, managing director & Co-CIO at Paleo Leon in Princeton, New Jersey.

"Whatever positive vibes came out of the labor market report were upstaged by negative vibes from the SVB situation," said Praveen.

In individual stocks, Gap Inc fell after the apparel retailer posted a bigger-than-expected fourth-quarter loss and forecast full-year sales below Wall Street estimates.

Oracle Corp slid after the software firm missed third-quarter revenue estimates.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Wall Street's indexes closed lower Friday as investors ran for the exits stressing out about the health of U.S. banks after regulators had to close a high-profile lender to the technology sector, overshadowing the February jobs report.
financial markets
397
2023-31-10
Friday, 10 March 2023 04:31 PM
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