Source: Wind
U.S. stocks rose slightly on Thursday, and investors weighed future interest rate trends after the Federal Reserve raised interest rates by 25 basis points.
Specifically, the S&P 500 index rose 11.75 points to 3948.72 points, an increase of 0.3%. The Dow Jones Industrial Average Price Index rose 75.14 points to 32105.25 points, or 0.2%. The Nasdaq Composite Index, which is dominated by technology stocks, rose 117.44 points to 11787.40 points, an increase of 1%.
Federal Reserve Chairman Powell said on Wednesday that officials are considering not raising interest rates after pressure on the banking industry intensified last week. The Federal Reserve's latest policy statement suggests that policymakers think interest rate hikes may soon be over.
On Wednesday, after Powell's speech, the US stock market initially rebounded, but it quickly recovered gains and closed near an intraday low. Some traders attributed the late-session sell-off to remarks made by US Treasury Secretary Janet Yellen (Janet Yellen). Yellen said during the Senate hearing that she is not considering ways to guarantee all bank deposits.
This volatile trade continued on Thursday. US stocks rose for most of the day and closed higher, but in the last hour of trading, the rebound lost some momentum.
Jeff Kilberg, founder and CEO of KKM Finance, said, “Investors are uneasy about the ambiguous information between Powell and Yellen. The market is struggling to cope with this uncertainty.”
US stocks are experiencing a turbulent trading period, and investors have been struggling with two economic realities. On the one hand, inflation remains high, and the Federal Reserve has indicated that it will work to curb it. Powell reiterated on Wednesday that interest rate cuts later this year were not his “basic expectations” — many investors still expect interest rate cuts.
Meanwhile, the US banking crisis continues to spread. This has heightened concerns about a recession and has led to regional bank turmoil.
The banks' stocks were among the biggest declines in the S&P 500 on Thursday. First Republic Bank shares fell 80 cents to $12.53 per share, or 6%. Comerica's stock price fell $3.82 to $40.70, or 8.6%. M&T declined $5.29 to close at $112.37, or 4.5%.
Some investors and analysts fear that the pressure on regional banks will spread to other sectors of the economy. Jefferies economists said they expect regional banks to tighten credit standards when lending to small businesses, leading to layoffs in the coming weeks.
The latest data released on Thursday showed that the number of people applying for unemployment benefits remained almost stable last week, indicating that the overall labor market remained strong despite large companies announcing layoffs. In their report to clients, these economists wrote, “The strength of today's data reminds us that the expected decline in labor market strength begins with an extremely strong situation, which will take time to become apparent.”
Nine of the 11 sectors of the S&P 500 index closed lower, but risk sentiment in technology stocks has recovered. The information technology sector of the S&P 500 index rose about 1.7%, while the communications services sector rose 1.8%. In the general market index, Netflix saw the biggest increase, to $320.37 per share, or $26.47, or 9%.
R.J. Grant (R.J. Grant), head of stock trading at KBW, said, “Tech stocks usually lead the way when the 'Fed ends interest rate hike' deal begins.”
However, tech companies have also been hit by regional banking woes. Clifton Marriott (Clifton Marriott), co-head of the European technology, media and telecommunications business of Goldman Sachs's investment banking division, said that the Bank of Silicon Valley went out of business on March 10 was “quite pressured” because the bank's customers were busy figuring out how to pay wages.
Marriott pointed out, “The first weekend was a bit like a Lehman moment for the tech industry; it was really more operational for these companies. They need funding, and many of their balances are in Silicon Valley bank accounts, and they have since made payments to Silicon Valley banks, including wages to employees.”
The Bank of Silicon Valley was founded in 1983 and is considered a reliable source of funding for tech startups and venture capital firms. This California-based commercial bank is a subsidiary of SVB Financial Group (SVB Financial Group). It was once the 16th largest bank in the US and the bank with the largest deposit in Silicon Valley.
The Bank of Silicon Valley was taken over by the US government after venture capitalists and tech startup clients withdrew billions of dollars from their accounts. Fearing that the bank might go bankrupt, many VCs recommended that portfolio companies withdraw their capital.
Editor/jayden