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Wall Street closed sharply lower on Friday, ending a topsy-turvy week. Markets remained volatile as the banking sector crisis continued to unfold. Investors pulled back their positions from a major regional bank despite a relief package from other financial institutions. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.2%, or 384.57 points, to close at 31,861.98. Twenty-four components of the 30-stock index ended in negative territory, while six ended in positive.
The S&P 500 lost 1.1% or 43.64 points to close at 3,916.64. All the 11 broad sectors of the benchmark index ended in negative territory. The Financials Select Sector SPDR (XLF), the Real Estate Select Sector SPDR (XLRE) and the Industrials Select Sector SPDR (XLI) fell 3.2%, 2.3% and 1.6%, respectively.
The tech-heavy Nasdaq slid 0.7% or 86.76 points to finish at 11,630.51.
The fear-gauge CBOE Volatility Index (VIX) was up 11% to 25.51. A total of 19.4 billion shares were traded on Friday, higher than the last 20-session average of 12.5 billion. Decliners outnumbered advancers on the NYSE by a 4.07-to-1 ratio. On Nasdaq, a 2.94-to-1 ratio favored declining issues.
First Republic Drags Down Other Regional Banks
Shares of First Republic Bank were under severe pressure on Friday, even as 11 other banks pledged to deposit $30 billion in the bank as a vote of confidence in the company in the previous session. The stock of the beaten-down regional bank plummeted 32.8% at the session close, falling more than 70% for the week.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” read a statement made by the group, which has pledged to come to the rescue, and includes Goldman Sachs, Morgan Stanley and Citigroup. However, there are concerns that Thursday’s promised aid may still not be enough to shore up First Republic.
There are reports suggesting that the bank’s management is exploring different strategic options, which may include a full sale or a partial divestment of the loan portfolio. The New York Times reported late on Friday that First Republic was in talks to raise capital by selling shares to other unnamed banks or private equity firms in a private sale. Terms of the deal were still being discussed.
The recent banking crisis sparked by the woes of the SVB Financial Group and its fallout continues to send tremors that are being felt by the financial sector. Dovish policymakers and rescue packages might be softening the impact, but investor confidence is currently somber as the outlook looks bleak. First Republic’s troubles had a major impact on the regional banking sector. The SPDR S&P Reginal Banking ETF (KRE) lost 6% on the day.
Per a report released by the Federal Reserve, industrial production was unchanged in February, and manufacturing output edged up 0.1%. In January, industrial production had increased 0.3%. Capacity utilization was unchanged in February at 78%, 1.6 percentage points below its long-run (1972–2022) average.
The University of Michigan reported that Consumer Confidence for March had come in at 63.4, decreasing from the unrevised 67 in February.
Weekly Roundup
Two of the three most widely followed indexes ended the week in the green. The Nasdaq Composite advanced 4.4%, while the S&P 500 gained 1.4%. The Dow Jones Industrial Average, however, lost 0.2% to close the week in the negative territory as the banking sector crisis continued to weigh on the market.
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Stock Market News for Mar 20, 2023
Wall Street closed sharply lower on Friday, ending a topsy-turvy week. Markets remained volatile as the banking sector crisis continued to unfold. Investors pulled back their positions from a major regional bank despite a relief package from other financial institutions. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.2%, or 384.57 points, to close at 31,861.98. Twenty-four components of the 30-stock index ended in negative territory, while six ended in positive.
The S&P 500 lost 1.1% or 43.64 points to close at 3,916.64. All the 11 broad sectors of the benchmark index ended in negative territory. The Financials Select Sector SPDR (XLF), the Real Estate Select Sector SPDR (XLRE) and the Industrials Select Sector SPDR (XLI) fell 3.2%, 2.3% and 1.6%, respectively.
The tech-heavy Nasdaq slid 0.7% or 86.76 points to finish at 11,630.51.
The fear-gauge CBOE Volatility Index (VIX) was up 11% to 25.51. A total of 19.4 billion shares were traded on Friday, higher than the last 20-session average of 12.5 billion. Decliners outnumbered advancers on the NYSE by a 4.07-to-1 ratio. On Nasdaq, a 2.94-to-1 ratio favored declining issues.
First Republic Drags Down Other Regional Banks
Shares of First Republic Bank were under severe pressure on Friday, even as 11 other banks pledged to deposit $30 billion in the bank as a vote of confidence in the company in the previous session. The stock of the beaten-down regional bank plummeted 32.8% at the session close, falling more than 70% for the week.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” read a statement made by the group, which has pledged to come to the rescue, and includes Goldman Sachs, Morgan Stanley and Citigroup. However, there are concerns that Thursday’s promised aid may still not be enough to shore up First Republic.
There are reports suggesting that the bank’s management is exploring different strategic options, which may include a full sale or a partial divestment of the loan portfolio. The New York Times reported late on Friday that First Republic was in talks to raise capital by selling shares to other unnamed banks or private equity firms in a private sale. Terms of the deal were still being discussed.
The recent banking crisis sparked by the woes of the SVB Financial Group and its fallout continues to send tremors that are being felt by the financial sector. Dovish policymakers and rescue packages might be softening the impact, but investor confidence is currently somber as the outlook looks bleak. First Republic’s troubles had a major impact on the regional banking sector. The SPDR S&P Reginal Banking ETF (KRE) lost 6% on the day.
Consequently, shares of PacWest Bancorp and Western Alliance Bancorporation (WAL - Free Report) plunged 19% and 15%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Per a report released by the Federal Reserve, industrial production was unchanged in February, and manufacturing output edged up 0.1%. In January, industrial production had increased 0.3%. Capacity utilization was unchanged in February at 78%, 1.6 percentage points below its long-run (1972–2022) average.
The University of Michigan reported that Consumer Confidence for March had come in at 63.4, decreasing from the unrevised 67 in February.
Weekly Roundup
Two of the three most widely followed indexes ended the week in the green. The Nasdaq Composite advanced 4.4%, while the S&P 500 gained 1.4%. The Dow Jones Industrial Average, however, lost 0.2% to close the week in the negative territory as the banking sector crisis continued to weigh on the market.