![]() ![]() ![]() The yield normally moves in tiny fractions of a percentage point each day, and only topped 5 percent last week for the first time since mid-2007. The two-year Treasury yield, which is sensitive to changes in interest rate expectations, fell 0.59 percentage points, to just above 4 percent - its biggest one-day drop since the “Black Monday” of October 1987, one of the most severe market crashes on record. The S&P 500 ended the day 0.2 percent lower, after being down by more than 1 percent in early trading. Those altered expectations helped the broader S&P 500 stock index shrug off the worst of the pain in the banking sector, because fewer rate increases would mean costs rising less for companies - a positive for investors. ![]() There was a growing sense among investors that fears over the resilience of the economy would stay the central bank’s hand, especially because the root cause of the issues faced by Silicon Valley Bank and Signature came from the interest rate increases enacted over the past year. The crisis in the banking sector prompted a swift re-evaluation of the likelihood that the Federal Reserve would continue its pace of interest rate increases. “We feel very well positioned in light of the diversity of our deposit base.” “A core of a lot of this is behavior and psychology,” said Alan McKnight, chief financial officer at Regions Wealth Management, the investment management arm of Birmingham, Ala.-based Regions Bank, which tumbled about 7 percent on Monday. The KBW bank index, which tracks the performance of 24 major banks, fell almost 12 percent, adding to sharp losses last week that erased nearly $200 billion from the aggregate value of the banks in the index. ![]() Citigroup and Wells Fargo each fell more than 7 percent, Bank of America slid 5.6 percent, and JPMorgan Chase dipped by less than 2 percent. Shares of bigger banks were less affected, but not immune. Arizona-based Western Alliance tumbled 45 percent, Ke圜orp and Comerica both dropped nearly 30 percent, and Utah-based Zions Bancorp fell about 25 percent. First Republic Bank stood out as the worst mover on the day, down 60 percent. ![]()
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