The bag of NY was volatile this Monday after opening lowerin a market shaken by bank failures in recent days in USA and the fear of a possible contagion despite announcements of official contingency measures to guarantee deposits.
The stock market contained its losses an hour after the opening thanks to the pharmaceutical sector and other “defensive” values.
By 9:20 am, the Dow Jones was down a marginal 0.05%, the tech-heavy Nasdaq was down 0.10% and the S&P 500 was down 0.27%.
extreme volatility
The indices show a extreme volatility and they go from positive to negative and vice versa constantly.
Concerned about the situation of the banking sector after the bankruptcy of the Silicon Valley Bank, traders focus on safer assets, starting with US Treasuries.
Yields on the 10-year bond fell to 3.48% from 3.69% at the close on Friday, due to a buying spree by investors seeking safety. This increases the price of these papers and reduces the yield that the Treasury must pay when issuing them.
This downward movement in bond rates “suggests that the market does not believe the Fed will continue to raise interest rates (ndlr: to fight inflation) at the pace expected last week,” according to LPL Financial’s Quincy Krosby. .
After the bankruptcy of Silicon Valley Bank (SVB) on Friday and its takeover by the federal authorities, another bank, the New York Ssignature bankwas closed on Sunday by regulators.
Three banks have already gone bankrupt in less than a week, in a context of an aggressive rise in interest rates by the Federal Reserve (Fed, central bank) to contain inflation.
The prospect of a Fed crash encouraged some investors to buy stocks.
The pharmaceutical sector on its side benefited from the purchase of the biotech Seagen (+15.83%), specialized in cancer treatments, by the giant Pfizer (+2.04%), for 43,000 million dollars.
Amgen, Gilead, and even modern labs were swayed by this ad.
Some “defensive” values, less sensitive to the economic situation such as Johnson & Johnson (+1.99%), Procter & Gamble (+2.64%) or Coca-Cola (+1.94%), rose.
strong measures
Meanwhile, the Treasury, the Fed and the federal deposit insurance agency, the FDCI, announced that they will guarantee all funds placed in the SVB and Signature Bank. Customers will thus be able to access them.
The Fed will also lend money to any bank that needs it to cover withdrawals.
They are trying to restore “trust,” said Quincy Krosby of LPL Financial. “Confidence is eroding in the market. You see it particularly with regional banks.”
At the opening, the Californian bank First Republic fell to 73.02%. The San Francisco bank has lost more than three-quarters of its stock value since Wednesday. It is the fourteenth bank in the country by assets, with some 212,000 million dollars.
Other regional entities also yielded such as the Californian PacWest (-54.74%), Western Alliance (-82.47%) based in Phoenix (Arizona) or Zions Bancorporation (-31.60%), from Salt Lake City (Utah). ).
“We’re going to keep a close eye on the big banks and the insurers,” Crosby said.
Large financial institutions fell but in much smaller proportions: Bank of America lost 5.07%, Wells Fargo 5.62% and Citigroup 5.44%.
“The problem is not solved, at least that’s what the market thinks,” Patrick O’Hare of Briefing.com added in a note.
AFP
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