A selloff in American regional banks sank equities across the board, with renewed concerns over stability of the financial system spurring a flight to the safest corners of the market.
(Bloomberg) — A selloff in American regional banks sank equities across the board, with renewed concerns over stability of the financial system spurring a flight to the safest corners of the market.
Financial shares weighed heavily on trading, with the S&P 500 down over 1.5% and all 21 companies in the KBW Bank Index getting hit. The $2.7 billion SPDR S&P Regional Banking exchange-traded fund tumbled almost 8% and headed toward its lowest since October 2020. PacWest Bancorp and Western Alliance Bancorp plunged at least 20%.
Treasury two-year yields slumped as much as 21 basis points and approaching the 4% threshold. Bonds also climbed after data showing JOLTS jobs opening figures fell a third month to the lowest in nearly two years.
Swaps continued to price a quarter-point Federal Reserve hike as a near certainty for Wednesday’s meeting, although bets have increased on how much subsequent easing might need to be done in the back end of 2023 and into 2024, spurred on by recession fears.
Meantime, Treasury bill yields for June topped 5% after Janet Yellen warned the Treasury could run out of cash as soon as next month.
Corporate Highlights:
- Morgan Stanley is preparing a fresh round of job cuts amid a renewed focus on expenses as recession fears delay a rebound in dealmaking.
- Uber Technologies Inc. reported earnings that beat analysts’ estimates, showing that consumers continue to spend more on rides and food takeout.
- Pfizer Inc.’s profit and revenue outpaced analysts’ expectations as demand for its pandemic products persisted.
- Marriott International Inc. reported earnings that beat expectations as consumer demand for vacations continued to make up for slower business travel.
- Tesla Inc. has slightly raised prices of its Model 3 sedan and Model Y sports utility vehicle in the US and China, as the electric vehicle pioneer continues to tweak its pricing policy.
Key events this week:
- ADP employment, S&P global US services PMI, ISM services, Wednesday
- Fed Chair Jerome Powell holds news conference following rate decision, Wednesday
- US initial jobless claims, trade balance, Thursday
- European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.7% as of 11:12 a.m. New York time
- The Nasdaq 100 fell 1.2%
- The Dow Jones Industrial Average fell 1.6%
- The Stoxx Europe 600 fell 1.2%
- The MSCI World index fell 1.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0984
- The British pound fell 0.3% to $1.2461
- The Japanese yen rose 0.7% to 136.51 per dollar
Cryptocurrencies
- Bitcoin rose 2.8% to $28,465.64
- Ether rose 2.7% to $1,856.02
Bonds
- The yield on 10-year Treasuries declined 13 basis points to 3.44%
- Germany’s 10-year yield declined five basis points to 2.26%
- Britain’s 10-year yield declined four basis points to 3.68%
Commodities
- West Texas Intermediate crude fell 4.2% to $72.49 a barrel
- Gold futures rose 1.3% to $2,018.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
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