Matthew Fox
Reuters US stocks managed to prove resilient and shake off a potential regional bank crisis, with stocks mixed.The implosion of Silicon Valley Bank and Signature Bank spurred hopes that the Fed will end its interest rate hikes.”We are looking at a historic 2-day drop in the 2-year yield, the largest since right after the 1987 crash,” Carson Group’s Ryan Detrick told Insider. Loading Something is loading.
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US stocks proved resilient on Monday, trading mixed despite the continued fallout from the collapse of Silicon Valley Bank and Signature Bank at the end of last week.
Helping stocks recover from an early morning sell-off, aside from emergency measures that helped prevent a regional banking crisis, was a plunge in bond yields and growing expectations that the Fed would change its stance on interest rate hikes.
“We are looking at a historic 2 day drop in the 2-year yield, the largest since right after the 1987 crash. It feels like a lifetime ago, but six days ago there was an 80% chance of a 50 basis point hike at the next meeting, now there is virtually no chance of that and a growing chorus for no hike at all,” Carson Group’s chief market strategist Ryan Detrick told Insider.
Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:
S&P 500: 3,855.76, down 0.15%Dow Jones Industrial Average: 31,819.14, down 0.28%Nasdaq Composite: 11,188.84, up 0.45%According to Detrick, all eyes are on the release of tomorrow’s February CPI report. “Should it show inflation slowing, this will greatly take pressure off the Fed and the chances of no hike will grow,” Detrick said.
Here’s what else happened today:
Short-dated US Treasury bond yields posted their largest drop in nearly 15 years, with yields on 2-year US Treasury notes falling as much as 44 basis points.First Republic Bank’s stock cratered more than 60% on Monday as investors count the similarities between it and Silicon Valley Bank.Charles Schwab plunged as much as 25% in early Monday trades as investors scrutinized its $27 billion in unrealized losses related to its massive bond holdings.Goldman Sachs now expects the Fed to pause its rate hikes at next week’s FOMC meeting as uncertainty related to the bank collapse soars. Markets are now pricing in Fed interest rate cuts of 75 basis points by the end of the year, according to the CME FedWatch Tool. In commodities, bonds and crypto:
West Texas Intermediate crude oil fell 2.86% to $74.49 per barrel. Brent crude, oil’s international benchmark, dropped 2.84% to $80.43.Gold rose 2.75% to $1,918.60 per ounce.The yield on the 10-year Treasury sank 16 basis points to 3.54%.Bitcoin rose 9.22% to $24,388, while ether jumped 5.69% to $1,686. Read next
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