A tumultuous week in U.S. financial markets ended in uncertainty on Friday after a massive $30 billion deposit by big banks into First Republic Bank failed to reassure investors.
Last week, the sudden collapse of three US banks – Silvergate Capital, Signature Bank
SBNY
and Silicon Valley Bank—began to rekindle concerns about banking sector weakness amid sharply higher interest rates.
SVB Financial Group
SIVB
on Friday filed for Chapter 11 bankruptcy and announced it will seek court-supervised reorganization proceedings. Silicon Valley Bank was placed into federal receivership after its deposits were slashed.
Within days, other regional banks and financial companies have been forced to sell.
First Republic Bank
FRC
,
Another mid-sized California bank saw its stock hit an intraday record low this week before the bank was promised $30 billion in collateralized deposits from a group of the nation’s biggest banks, including JPMorgan Chase.
JPM
,
Bank of America
BAC
,
Wells Fargo
WFC
and Citigroup
C
.
In Europe, shares of the Swiss banking giant Credit Suisse
CS
fell to about $2 a share in New York trading. The bank said Thursday it plans to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank to boost liquidity. The bank’s shares in New York fell 33.9% compared to last year’s Friday.
Here’s a look at the big swings in financial markets over the past week or so.
Shares of the SPDR S&P Regional Banking ETF
CREATE
,
which covers regional banks in the broader S&P 500, fell 24.5% in the past seven trading days since March 9, a day after SVB said it had sold a portfolio of securities at a loss of more than $1 billion. Depositors began fleeing, and regulators closed the bank on March 10.
The Treasury, FDIC and Federal Reserve on Sunday announced guarantees for all deposits at Silicon Valley Bank and Signature Bank to bolster confidence in the banking sector.
Shares of the SPDR S&P Regional Banking ETF fell 6% on Friday. Shares of First Republic Bank fell 32.8% after a $30 billion inflow of deposits failed to calm jittery investors.
The sell-off in bank stocks dragged down the broader stock market, leaving the S&P 500 index down
SPX
Down 2.1% since March 9 and briefly erased early 2023 gains for the major-cap benchmark.
The S&P 500 fell 1.1% on Friday, but rose 1.4% for the week, according to Dow Jones market data. It was up 2 percent on the year on Friday.
Nasdaq Composite Index
COMP
outperformed the Dow Jones Industrial Average by 4.45 percentage points this week, the biggest weekly return since March 20, 2020, according to Dow Jones market data.
A jump in major technology and semiconductor names helped curb losses in the Nasdaq 100 index, which tracks the top 100 technology companies on the Nasdaq stock exchange.
Nasdaq Composite Index
COMP
ended lower on Friday but posted a weekly gain of 4.4 percent, while the Dow Jones Industrial Average
DJIA
fell 0.2% for the week.
Look: Microsoft, Apple and Meta outperform as investors seek safety in megacap tech stocks
The bond market also had a week of extremes. 2-year government bond yield
TMUBMUSD02Y
fell 74 basis points, the biggest weekly decline since October 1987, the Black Monday stock market crash, according to Dow Jones Market Data.
Look: Why bond market volatility is at its highest since the 2008 financial crisis amid bank failures
February’s CPI report further showed its swings that little progress was being made in curbing high inflation, which did not subside until the weekend. The politically sensitive 2-year government bond yield fell 28.4 basis points to 3.846 percent on Friday. It was the lowest level since September 14, 2022.
Trading in the Fed futures market has also been mixed, with odds on Friday indicating a 40 percent chance the central bank will not raise rates at its meeting next week and a 60 percent chance policymakers will raise rates by another 25 basis points to a certain range. 4.75% to 5%, according to the CME FedWatch tool.
Gold rose 8.1% over the past seven trading days to close at an 11-month high on Friday and post its best weekly gain in nearly three years, according to Dow Jones market data. The fear of possible additional stress in the banking sector weighed on investors’ sentiment and strengthened the safe harbor of the yellow metal.
Gold futures for April delivery
GC00
GCJ23
rose $50.50, or 2.6%, to settle at $1,973.50 an ounce on the Comex on Friday, with the most active contract up 5.7% for the week. This was the yellow metal’s highest settlement since April 18, 2022 and its biggest weekly gain since April 2020, according to Dow Jones Market Data.
ICE US Dollar Index
DXY
,
a measure of back-of-the-green strength against rivals’ baskets, down 1.5% from last Thursday. The dollar also closely follows the 2-year yield changes.
The dollar index bounced on Wednesday morning as liquidity concerns at Credit Suisse sparked concerns about risks in the global banking system, prompting safe-haven buying of the dollar.
Oil futures tumbled, with the most active U.S. contract ending at a 15-month low and posting its biggest weekly drop in nine months, according to Dow Jones market data.
US benchmark West Texas Intermediate crude oil for April delivery
CL00
CL.1
CLJ23
fell $1.61, or 2.4%, to settle at $66.74 a barrel on the New York Mercantile Exchange, leaving the contract with a weekly loss of 13%, according to Dow Jones Market Data.
The contract is down 14.2% over the past seven trading sessions, according to Dow Jones Market Data.
The price of Bitcoin rose last Wednesday when Silvergate Capital Corp.
AND
said its crypto-friendly Silvergate Bank will cease operations and liquidate it with the goal of returning all deposits.
However, following the failure of SVB and Signature Bank, Bitcoin rallied more than 20% over the past nine sessions to trade at $26,750.50 on Friday, according to CoinDesk data.
Bitcoin has long been viewed with skepticism by financial institutions, but its proponents have argued that it represents an alternative to the traditional banking system.
Look: What happened to Silvergate Capital? And why does it matter?