- First Republic Bank does not agree to pay a dividend
- SVB Financial applies for bankruptcy protection
- FedEx jumps to full-year profit forecast increase
- Indices down: Dow 1.31%, S&P 1.17%, Nasdaq 0.80%
NEW YORK, March 17 (Reuters) – Wall Street fell on Friday, ending a tumultuous week marked by a crisis in the banking sector and gathering storm clouds of a potential recession.
All three indexes were sharply lower in afternoon trade, with financials ( .SPNY ) the biggest losers among the S&P 500’s main sectors.
During the week, even though the S&P 500 index is approaching last Friday’s close higher, the Nasdaq and the Dow have set the course for the decline.
SVB Financial Group ( SIVB.O ) said it will file for Chapter 11 bankruptcy protection, the latest development in the ongoing drama that began last week with the collapse of SVB and Signature Bank ( SBNY.O ), sparking fears of contagion around the world. banking system.
“It feels like it’s been a month since Monday,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta, adding, “based on past experience, there’s always the concern that whenever a financial institution is in trouble, that it’s systemic.”
“I don’t think there’s a systemic problem in the industry,” he said. “Banks just haven’t kept up with the rates they need to attract and maintain deposits.”
Over the past two weeks, the S&P Banking Index (.SPXBK) and the KBW Regional Banking Index (.KRX) have both fallen about 21%, the biggest two-week declines since March 2020, when the COVID-19 pandemic hit the economy the steepest and most suddenly to decline.
A day after news of an unprecedented $30 billion bailout for major financial institutions, First Republic Bank ( FRC.N ) fell 26.0% after the bank said it would suspend its dividend.
Among First Republic peers, PacWest Bancorp ( PACW.O ) fell 14.8%, while Western Alliance ( WAL.N ) fell 13.0%.
Investors are now turning their eyes to the Federal Reserve’s two-day monetary policy meeting next week.
Based on recent developments in the banking sector and data pointing to a weakening economy, investors have adjusted their expectations about the size and duration of the Fed’s restrictive rate hikes.
At last glance, financial markets have priced in a 70.1 percent chance the central bank will raise its key interest rate by 25 basis points and a 29.9 percent chance it will leave the current rate on hold, according to CME’s FedWatch tool.
The Dow Jones Industrial Average (.DJI) was down 423.76 points, or 1.31%, at 31,822.79, the S&P 500 (.SPX) was down 46.21 points, or 1.17%, at 3,914.07 and the Nasdaq Composite was down 1.66%, or 1.11 points. (.IX.3 or IC.) from 0.8% to 11,624.12.
All 11 major S&P 500 sectors were last in negative territory, and tech stocks (.SPLRCT) flirted with the green.
On the upside, FedEx Corp ( FDX.N ) jumped 8.1% after raising its forecast for the current fiscal year.
Declining issues outnumbered advancing ones on the NYSE by a ratio of 4.55:1; In Nasdaq, the ratio of 3.14:1 favored declines.
S&P 500 posted 5 new 52-week highs and 19 new lows; The Nasdaq Composite recorded 24 new highs and 242 new lows.
Reporting by Stephen Culp in New YorkAdditional reporting by Shubham Batra and Amruta Khandekar in BengaluruEditing by Matthew Lewis
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