Finance stocks hit; others do better
Bank stocks tumbled Monday on worries triggered by the second- and third- largest bank failures in U. S. history. But many other stocks rose on hopes the bloodletting will force the Federal Reserve to take it easier on interest rate hikes.
The Standard & Poor’s 500 dipped 0.2% after whipsaw trading. The Dow Jones industrial average fell 90 points, or 0.3%, and the Nasdaq composite rose 0.4%.
The sharpest drops were again among banks. Investors are worried that relentless interest rate increases meant to get inf lation under control are approaching a tipping point and may be cracking the banking system.
The U. S. government announced a plan late Sunday meant to shore up the banking industry after the recent collapses of Silicon Valley Bank and Signature Bank.
The most pressure is on the regional banks a couple of steps smaller than the massive, “too big to fail” banks that helped take down the economy in 2007 and 2008. Shares of First Republic fell 61.8%, even after the bank said Sunday it had strengthened its f inances with cash from the Federal Reserve and JPMorgan Chase.
Huge banks, which have been repeatedly stresstested by regulators after the 2008 f inancial crisis, weren’t down as much. JPMorgan Chase fell 1.8%, and Bank of America dropped 5.8%.
“So far, it seems that the potential problem banks are few, and importantly do not extend to the so- called systemically important banks,” analysts at ING said.
Prices for Treasurys shot higher as investors sought safety and as their expectations grew for an easier Fed. That in turn sent their yields lower, and the yield on the 10year Treasury plunged to 3.54% from 3.70% late Friday. That’s a major move for the bond market.
The two- year yield, which moves more on expectations for the Fed, had an even more breathtaking drop. It fell to 3.99% from 4.59% on Friday. It was above 5% earlier this month.
All told, the S& P 500 slipped 5.83 points to 3,855.76. The Dow fell 90.50 points to 31,819.14, and the Nasdaq rose 49.96 points to 11,188.84.