Wall Street on Friday closed lower, marking the end of a tumultuous week dominated by an unfolding crisis in the banking sector and the gathering storm clouds of possible recession.
All three major indices ended the session deep in negative territory, with financial stocks down the most among the major sectors of the S&P 500.
For the week, while the benchmark S&P 500 and the NASDAQ closed higher than their previous Friday results, up 1.43 percent and 4.41 percent respectively, the Dow Jones Industrial Average posted a weekly decline of 0.15 percent.
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 Silicon Valley Bank and Signature Bank, which sparked fears of contagion throughout the global banking system.
The sell-off “is a bit of an overreaction,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “However, there is validity to some of the concerns regarding overall liquidity and a potential liquidity crunch.”
Those concerns have spread to Europe, as Credit Suisse Group AG shares stumbled over liquidity worries, prompting policymakers to scramble to reassure markets.
Photo: AFP
“This goes a lot further than just a run on SVB or First Republic, it goes to the real impact these interest rate hikes are having on capital and balance sheets,” Pursche said. “And you’re seeing it impact large institutions like Credit Suisse, and that’s got people rattled.”
Over the past two weeks, the S&P Banking Index and the KBW NASDAQ Regional Banking Index plunged by 4.6 percent and 5.4 percent respectively, their largest two-week drops since March 2020.
First Republic Bank plummeted 32.8 percent after the bank announced it was suspending its dividend, reversing Thursday’s surge, which was sparked by an unprecedented US$30 billion rescue package from large financial institutions
Among First Republic’s peers, PacWest Bancorp fell 19 percent, while Western Alliance slid 15.1 percent.
US-traded shares of Credit Suisse also closed sharply lower, down 6.9 percent.
Investors now turn their gaze to the US 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.
“This mini banking crisis has increased the chance of recession and accelerated the slowdown timeline for the economy,” Pursche said. “It’s natural that the Fed should re-examine its course of action, but it’s still very clear that while inflation is slowing, it’s still very much a concern and needs to be brought under control.”
At last glance, financial markets have priced in a 60.5 percent likelihood that the central bank will raise its key target rate by 25 basis points, and a 39.5 percent probability that it will let the current rate stand, CME Group Inc’s FedWatch tool showed.
The Dow Jones fell 384.57 points, or 1.19 percent, to 31,861.98, the S&P 500 lost 43.64 points, or 1.10 percent, to 3,916.64 and the NASDAQ Composite dropped 86.76 points, or 0.74 percent, to 11,630.51.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said it plans to ship its new 1 megawatt charging systems for electric trucks and buses in the first half of next year at the earliest. The new charging piles, which deliver up to 1 megawatt of charging power, are designed for heavy-duty electric vehicles, and support a maximum current of 1,500 amperes and output of 1,250 volts, Delta said in a news release. “If everything goes smoothly, we could begin shipping those new charging systems as early as in the first half of next year,” a company official said. The new
RSS