Renewed banking concerns contribute to Wall Street’s notable pullback USA News Update

Renewed banking concerns contribute to Wall Street’s notable pullback

After rising sharply in Thursday’s session, stocks fell sharply in Friday’s session. The major averages all showed notable downward moves during the day, with the Nasdaq posting a four-fight winning streak.

Major averages ended the session at their worst but still firmly negative. The Dow Jones fell 384.57 points or 1.2% to 31,861.98, the Nasdaq slipped 86.76 points or 0.7% to 11,630.51 and the S&P 500 fell 43.64 points or 1.1% at 3,916.64.

For the week, the Nasdaq climbed 4.4% and the S&P 500 jumped 1.4%, but the narrower Dow Jones fell slightly by 0.2%.

Wall Street’s pullback came as some traders sought to take advantage of Thursday’s rally amid lingering concerns about turmoil in the financial sector.

Shares of First Republic Bank (FRC) posted a sharp pullback on the day, falling 32.8% after jumping 10.0% on Thursday.

The jump from the previous session came as a group of financial institutions agreed to deposit $30 billion in the First Republic in a bid to express confidence in the banking system.

“US stocks are weakening on fears that this week’s banking turmoil will lead to tougher lending standards that will cripple small businesses and eventually send this economy in a recession,” said Edward Moya, senior market analyst at OANDA.

He added: “The Fed’s rate hike cycle already looked restrictive, so now that we have increasing risks of bank bailouts and even tighter credit standards, the growth outlook for the economy is rather bleak. .”

Traders also continued to anticipate the Federal Reserve’s monetary policy announcement next Wednesday.

CME Group’s FedWatch tool currently indicates a 43.2% chance of the Fed leaving rates unchanged and a 56.8% chance of a 25 basis point rate hike.

In US economic news, the Fed released a report showing that US industrial production was unexpectedly flat in February.

The Fed said industrial production was unchanged in February after a revised 0.3% increase in January. Economists expected industrial production to rise 0.2% from the unchanged reading originally reported for the previous month.

A separate report from the University of Michigan showed consumer sentiment in the United States fell for the first time in four months in March.

The report said the consumer sentiment index slipped to 63.4 in March from 67.0 in February. Economists expected the index to remain unchanged.

Director of Consumer Surveys Joanne Hsu noted that the decline was already fully realized before the Silicon Valley Bank bankruptcy.

Meanwhile, the report showed a decrease in both short-term and long-term inflation expectations, with inflation expectations for the year ahead falling to the lowest level since April 2021.

Industry News

Banking stocks fell sharply after rebounding in the previous session, with the KBW banking index plunging 5.3%.

Considerable weakness was also visible among oil services stocks, as evidenced by the 3.0% drop in the Philadelphia Oil Services Index. The sell-off in Oil Services stocks came as the price of crude for April delivery fell $1.61 to $66.74 a barrel.

Airline stocks also showed significant downward movement during the day, dragging the NYSE Arca Airline Index down 3.0%.

Brokerage, commercial real estate and biotech stocks also saw notable weakness, while gold stocks bucked the downtrend amid a surge in the price of the precious metal.

Other markets

In foreign trade, stocks markets in the Asia-Pacific region increased mainly during Friday’s session. Japan’s Nikkei 225 Index climbed 1.2%, while China’s Shanghai Composite Index climbed 0.7%.

Meanwhile, major European markets showed notable downward moves on the day. While Britain’s FTSE 100 index fell 1.0%, Germany’s DAX index and France’s CAC 40 index fell 1.3% and 1.4%, respectively.

In the bond market, Treasuries showed a substantial rebound after falling during the previous session. Subsequently, the yield on the benchmark 10-year note, which moves opposite to its price, plunged 19 basis points to 3.395%.

Look forward

The Fed’s interest rate decision is expected to take center stage next week, eclipsing reports on new and existing home sales and durable goods orders.

For comments and feedback, contact: [email protected]

Renewed banking concerns contribute to Wall Street’s notable pullback

Source link