The New York Dow Jones Stock Exchange ended lower on Monday (March 13), with banking stocks falling sharply. Because investors are worried that the bankruptcy of Silicon Valley Bank (SVB) will weigh on the stability of the banking system, however, the Nasdaq closed in positive territory, supported by expectations that the Federal Reserve may not raise interest rates at the meeting of the this month.
The Dow Jones Industrial Average closed at 31,819.14 points, down 90.50 points or -0.28%, the S&P 500 closed at 3,855.76 points, down 5.83 points or -0.15%, and the Nasdaq closed at 11,188.84 points, up 40.96% or 40.94%
The US government ordered the closure of SVB last Friday. After SVB’s stock price fell heavily Amid concerns that GMB may have to raise significant capital to offset huge losses from the sale of US Treasury bonds, GMB has had to sell bonds at prices lower than the bill. Because bond prices have fallen against the rising interest rates following Fed policy. Meanwhile, high interest rates are affecting tech start-ups, which are SVB’s key customer base. and withdrew deposits from GMB
However, the Treasury Department and the Fed unanimously announced emergency relief measures on Tuesday, saying that people who deposited money at the SVB and Signature Bank, which had also been ordered to close, were also out of business. Deposits can be fully accessed from Monday 13 March. Meanwhile, the Fed announced the creation of a “Bank Term Funding Program” with the aim of protecting financial institutions from the effects of SVB’s bankruptcy.
Investors weighed more than 50% on expectations that the Fed will not raise interest rates at this month’s meeting. Following the collapse of SVB, it was the biggest crisis for the US banking sector since Lehman. Brothers went bankrupt in 2008, with the CME Group’s latest FedWatch Tool indicating that investors were weighing 54.2% that the Fed would hold interest rates at 4.50-4.75% at its March 21-22 meeting after previously, it had not investors have weighed such expectations.
Shares of First Republic Bank (FRB) sank 61.83% as investors worried that the collapse of the SVB would hurt banking stability. By spreading to US regional banks, including FRB, although FRB has a different policy than SVB, which is a bank that focuses on lending to startups in the technology sector.
Other bank stocks also plunged. Goldman Sachs was down 3.71%, Wells Fargo was down 7.13%, JPMorgan was down 1.8% and Morgan Stanley was down 2.32%.
However, investors buy defensive stocks, which are safe stocks that can withstand economic cycles well. As utilities and consumer goods, with Duke Energy stocks up 1.44%, Procter & Gamble stocks gaining 0.71%, and Kimberley-Clark stocks gaining 0.61%.
Technology stocks rallied and supported the Nasdaq, with Alphabet shares up 0.53%, Apple shares up 1.33%, Meta Platforms up 0.77% and Microsoft.T shares up 2.14%.
Investors are keeping an eye on the US release of the Consumer Price Index (CPI), which measures inflation on consumer spending. February today Although analysts expect the headline CPI, which includes food and energy, to rise 6.0% in February year on year. That’s slower than January’s 6.2 percent, with core CPI excluding food and energy expected to rise 5.5 percent year-on-year. This slowed by 5.6% in February.
