On Monday morning, the first indications from the U.S. stock markets gave futures an increase: Dow Jones futures rose by 1.2% compared to fair value, S&P 500 futures soared by 1.7%, and those of the Nasdaq 100 index gained 1.8%.
This comes after financial regulators, including the FDIC, revealed that all SVB Financial depositors could access their funds on Monday morning and unveiled a scheme to limit the potential spread of financial troubles. In addition, regulators announced the closure of Signature Bank (SBNY).
Friday, The Dow Jones Industrial Average recorded its fourth consecutive day of low, finishing 1.07% lower, or 345.22 points, to reach a closing value of 31,909.64 points. The S&P 500 index also suffered a loss of 1.45%, settling at 3,861.59 points, while the Nasdaq Composite index fell by 1.76% to close at 11,138.89 points.
On the final day of trading last week, the banking sector was rocked by the closure of Silicon Valley Bank, a tech-focused lender, due to losses it suffered on its bond portfolio. This caused the most significant bank failure since the 2008 global financial crisis and significantly impacted the banking sector.
On Friday, March 10, due to the high volume of withdrawals from its customers, especially those in the technology sector, Silicon Valley Bank could not handle the situation, and its efforts to raise liquidity were unsuccessful. As a result, the U.S. government took over the bank, and the management was turned over to the Federal Deposit Insurance Corporation (FDIC).
Some banking stocks, such as First Republic, PacWest, and Signature Bank, suffered repeated setbacks on Friday. First Republic’s stock fell 14.8%, while PacWest posted a 37.9% loss. While some well-known banking stocks, such as Goldman Sachs and Bank of America, suffered minor losses, regional banks were hit the hardest by the aftermath of the SVB. On the other hand, JPMorgan managed to hold on to a 2.5% gain.
During the previous week, all major indexes fell, resulting in losses. The Dow posted its worst weekly result since June, falling 4.44%. Similarly, the S&P and Nasdaq fell 4.55% and 4.71%, respectively.
The instability of bank stocks overshadowed the February employment report, indicating the possible inflation decline. As wages rose more than expected, investors were more concerned about low wage growth, which could lead the Federal Reserve to revise its forceful approach to rate hikes.
According to Friday’s February jobs report from the Labor Department, the U.S. economy generated 311,000 jobs, beating forecasts. However, the unemployment rate was slightly higher than expected, at 3.6%. Earlier, Econoday forecasted 220,000 nonfarm jobs for February and an unemployment rate of 3.4%.
Last week saw a significant drop in the 10-year Treasury yield by 29 basis points to 3.69%, which had previously reached a 2023 peak of 4.09% on March 2. In addition, the 2-year yield declined by 27 basis points to 4.59%, with a more significant decline of 31 basis points on Friday and Thursday-Friday. On the other hand, U.S. crude futures fell 3.8% to $76.68 a barrel on the week but rallied on Friday.
Price lists for Friday, March 10, 2023
DOW Jones -1.07% to 31,909.64
S&P 500 -1.45% to 3,861.59
NASDAQ 100 -1.38% to 11,830.28.