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First Republic Bank tumbles on suspending dividend
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SVB Financial seeks bankruptcy protection
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FedEx jumps on full-year profit forecast raise
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Indexes down: Dow 1.31%, S&P 1.17%, Nasdaq 0.80%
(New throughout, adds NEW YORK dateline, changes byline)
By Stephen Culp
NEW YORK, March 17 (Reuters) - Wall Street veered lower
on Friday at the close of a tumultuous week, marked by the
unfolding crisis in the banking sector and the gathering storm
clouds of possible recession.
All three indexes were sharply lower in afternoon trading,
with financial stocks down the most among the major
sectors of the S&P 500.
For the week, while the benchmark S&P 500 is on track to end
higher than last Friday's close, the Nasdaq and the Dow have set
a course for declines.
SVB Financial Group announced it would seek Chapter
11 bankruptcy protection, the latest development in an ongoing
drama that began last week with the collapse of SVB and
Signature Bank , which sparked fears of contagion
throughout the global banking system.
"It feels like it's been a month since Monday," said Joseph
Sroka, chief investment officer at NovaPoint in Atlanta, who
added, "there's always going to be a worry based on past
experience that any time a financial institution is in trouble
that it's systemic."
"I don't think there's a systemic problem in the sector," he
said. "The banks just have not kept up with the interest they
need to offer to attract and maintain deposits."
Over the last two weeks, the S&P Banking index and
the KBW Regional Banking index have both plunged by about
21%, their largest two-week drop since March 2020, when the
COVID-19 pandemic shoved the economy into its steepest and most
abrupt recession on record.
The day after surging on news of an unprecedented $30
billion rescue package from large financial institutions, First
Republic Bank plunged 26.0% after the bank announced
that it was suspending its dividend.
Among First Republic's peers, PacWest Bancorp fell
14.8% while Western Alliance slid 13.0%.
Investors now turn their gaze to the Federal Reserve's
two-day monetary policy meeting next week.
In view of recent developments in the banking sector and
data suggesting a softening economy, investors have adjusted
their expectations regarding the size and duration of the Fed's
restrictive interest rate hikes.
At last glance, financial markets have priced in a 70.1%
likelihood that the central bank will raise its key target rate
by 25 basis points, and a 29.9% probability that it will let the
current rate stand, according to CME's FedWatch tool.
The Dow Jones Industrial Average fell 423.76 points,
or 1.31%, to 31,822.79, the S&P 500 lost 46.21 points, or
1.17%, to 3,914.07 and the Nasdaq Composite dropped
93.16 points, or 0.8%, to 11,624.12.
All 11 major sectors of the S&P 500 were last in negative
territory, with technology stocks flirting with
flipping green.
On the upside, FedEx Corp jumped 8.1% after hiking
its current fiscal year forecast.
Declining issues outnumbered advancing ones on the NYSE by a
4.55-to-1 ratio; on Nasdaq, a 3.14-to-1 ratio favored decliners.
The S&P 500 posted 5 new 52-week highs and 19 new lows; the
Nasdaq Composite recorded 24 new highs and 242 new lows.
(Reporting by Stephen Culp in New York
Additional reporting by Shubham Batra and Amruta Khandekar in
Bengaluru
Editing by Matthew Lewis)
