US stocks trimmed losses in mid-day trading on Friday as markets closed out for a bumpy week after the Federal Reserve’s interest rate decision on Wednesday and further stress in the banking sector.
The S&P 500 (^GSPC), which fell by 1% at the start of Friday, the largest drop in a week, regained most of the losses by mid-afternoon, down just 0.1%. The Dow Jones Industrial Average (^DJI) was down about 35 points, or 0.1%, as of 12 PM EST, while the Nasdaq Composite (^IXIC) was down the most in mid-afternoon trading, down 0.25%. almost.
WTI (CL = F), which fell by 3% In previous trades, it trimmed losses by 2% to trade near $69 a barrel, but remained near its lowest level in nearly two years. Brent Crude (BZ=F) fell by more than 2%% to only $75 a barrel.
The pressure on oil comes after Energy Secretary Jennifer Granholm told lawmakers Thursday that refilling the country’s Strategic Petroleum Reserve could take several years and that it would be “difficult” to take advantage of the current drop in oil prices.
US government bond yields extended losses mid-afternoon with the benchmark 10-year Treasury yield dropping nearly 120 basis points to trade near 3.36%.
On Wednesday, the Fed raised interest rates by 25 basis points, raising the federal funds rate range to 4.75%-5%, the highest level since October 2007, as well as signaling that its aggressive campaign to raise interest rates to suppress inflation was in the works. way down.
“The committee expects some additional policy tightening to be appropriate in order to achieve a monetary policy stance that is sufficiently restrictive to return inflation to 2% over time,” the Fed said in its report. Policy statementand get rid of the language of “continuous interest rate increases” in interest rates.
Stocks ended Thursday’s volatile trading session higher as investors digested the Federal Reserve’s latest move.
“Powell stuck to the Fed’s narrative that there is still a path toward a soft landing or returning inflation to target without tipping the economy into recession,” Ryan Sweet, chief US economist at Oxford Economics, wrote in a note on Wednesday. But this path has become narrower due to the pressure on the banking system ».
On Friday, St. Louis Federal Reserve Bank President James Bullard raised his interest rate forecast for 2023 to 5.625%. That would beat the Fed’s latest “dot point” projection, which suggests rates will continue to rise in 2023, but only slightly, with benchmark interest rates rising to a peak of 5.1% this year, on par with the Bank’s forecast. Ex Fed in Dec.
Bank sentiment soured on Friday as investor concerns surrounding financial stability continued to mount after the stunning collapse of a Silicon Valley bank, which created a ripple effect across the entire financial system.
Stocks of major banks such as Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS) continued to decline.
Shares of regional banks including First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL), and Region Financial (RF) fell at midday, but mostly recovered from earlier larger losses. from today.
European bank operators Deutsche Bank (DB) and UBS (UBS) also trimmed losses, but they were still down 3% and 2.5%, respectively, as European banks continued to feel the effects of this crisis. Credit Suisse collapse.
according to ReutersDeutsche Bank’s credit default swaps, a form of insurance against default, jumped to a four-year high, adding to concerns about stability abroad.
Still, analysts seemed calm on Friday: “We have no concerns about Deutsche’s viability or asset labels. And just to be absolutely clear – Deutsche is not the next Credit Suisse bank,” Stuart Graham and Leona Lee, strategists at Autonomous, a subsidiary of AllianceBernstein, wrote in a blog post. New research note.
Treasury Secretary Janet Yellen announced Friday that she will meet with members of the Financial Stability Oversight Board at a previously unscheduled meeting in an effort to calm tensions in the banking sector.
Block (SQ) fell 3 more% In the mid-afternoon on Friday, after dropping 15% on Thursday, Wall Street continued to scrutinize fresh short-selling research from the Hindenburg.
Hindenburg Research imposed charges Fraud against the company founded and led by billionaire Jack Dorsey. In response, Block said it intends to work with the SEC “to explore legal action against Hindenburg Research for a factually inaccurate and misleading report they shared about our Cash Applications business today.”
“We had hoped that Block’s response/refutation would be more detailed and we believe ‘exploring due process’ will likely not be sufficient to settle investor concerns,” Citi analyst Peter Christiansen wrote in response to the Hindenburg report, echoing shareholder sentiments.
Coinbase (COIN) rebounded again on Friday, with shares up around 3%. After falling 14% Thursday after the company’s disclosure, it received a notice from the Wells Securities and Exchange Commission, which warns the companies of pending action from the regulator.
Netflix (NFLX), which led the S&P 500 Thursday with the stock up more than 9%, saw shares flat in early trading Friday, up about 2%.
Activision Blizzard (ATVI) rose 6.7% at the opening, the most since January 2022, after EU regulators said Friday it was. narrow the scope of his investigation in Microsoft’s planned $75 billion acquisition of the video game developer. By 12 PM EST, the stock was still up, up nearly 5.5%.
Shares of Silvergate Capital Corporation (SI) rose more than 60% amid high trading volume. The move represented the highest intraday jump since February 2.
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