US stocks closed sharply lower on Thursday, with the financial sector posting a sharp one-day drop, as investors waited for Friday’s February jobs data that could help decide how big the rise will be. of the interest rate that the Federal Reserve will set at its next meeting in two weeks.
How shares are traded
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The S&P 500 SPX,
-1.85%
fell 73.69 points, or 1.9%, to close at 3,918.32 -
Dow Jones Industrial Average DJIA,
-1.66%
it lost 543.54 points, or 1.7%, to end at 32,254.86, the lowest level since Nov. 3, 2022, according to Dow Jones Market Data. -
COMP Composite of Nasdaq,
-2.05%
decreased 237.65 points, or 2.1%, and ended at 11,338.35
Both the S&P 500 and Nasdaq finished higher on Wednesday, with only the Dow ending in the red, while all three indices were on track for weekly losses.
What drove the markets?
US stocks gave back morning gains to close sharply lower as investors exited the banking sector after SVB Financial Group’s SIVB.
Asset Sale and SI Announcement of Silvergate Capital Corp.,
decision to liquidate is crypto banking operations.
See: Bank carnage drags stocks lower as SVB Financial shares tumble
“This week we have had two really revealing events [in the bank sector]said Steve Sosnick, chief strategist at Interactive Brokers. The first he described was Silvergate, which investors seemed to brush off as “a unique set of circumstances,” he said. But looking at the spillover effect of Signature Bank SBNY,
and the carnage in shares of SVB, which funds tech startups, said the concerns “really affect a lot of people.”
Other financial stocks also fell, with the KBW Bank Index BKX,
falling 7.7%, recording its worst day since 2020, according to Dow Jones Market Data. SPDR S&P Bank ETF KBE,
it fell 7.3%, while the financial sector of the S&P 500 lost 4.1%.
See: SVB Financial shares suffer biggest drop in 25 years after heavy losses in stock sale and share offering
Treasury yields fell as the yield on the 2-year note BX:TMUBMUSD02Y fell 16.4 basis points to 4.9% from 5.064% on Wednesday, the biggest one-day drop since Jan. 6.
Sosnick told MarketWatch that what happened on Thursday was the classic “flight trade to safety,” meaning investors took money out of risky assets but put it into the safest possible assets they could find, which in this case ended up being short. Term estates.
Also Thursday, the number of Americans filing for unemployment benefits in early March jumped to a 10-week high of 211,000, the highest level since Christmas. That’s more than the 195,000 new applicants that economists polled by the Wall Street Journal had anticipated.
Economists said the data suggested the labor market may be starting to slow, which is seen as a necessary prerequisite for inflation to return to the Fed’s 2% target.
“The job market could be on the brink of a tipping point,” Peter Boockvar, chief investment officer at Bleakley Financial Group, said in an emailed comment.
See: Wall Street sees a minor gain of 225,000 US jobs in February. A much larger gain could spur a more rigid rate hike from the Fed.
Investors are now looking towards Friday’s closely watched February jobs report from the Labor Department. Economists polled by the Wall Street Journal expect 225,000 jobs to be created last month after 517,000 new jobs were added in January, much higher than economists had anticipated.
“If we get the expected 200,000, or really anything between, say, 180,000 and 240,000, this would be a return to the previous trend and signal that last month was really unique,” said Brad McMillan, Commonwealth’s chief investment officer. . Financial Network, in emailed comments.
“That would be viewed as a positive by the Fed and markets, suggesting that inflation may start to moderate again, but is still high enough to allow for continued economic growth.”
See: Bad economic data won’t be good for stocks, but good data will be even worse, says JPMorgan technical strategist
The Russell 2000 RUT,
The small-cap index closed Thursday below its 50-day moving average for the first time since Jan. 9, 2023, according to Dow Jones Market Data.
Stocks also suffered earlier in the week after Fed Chairman Powell said during testimony on Capitol Hill that rates would likely have to rise even higher than market participants expected. However, major indices experienced some relief a day later when he told policymakers that no decision had been made on the size of the next rate hike.
Companies in focus
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Silicon Valley Bank parent company shares SVB Financial Group closed down more than 60% on Thursday after the company disclosed large losses on stock sales and a stock offering aimed at boosting its balance sheet. SVB posted its biggest one-day sell-off since the dot-com boom, while its trading was halted several times on volatility, according to Dow Jones Market Data.
- signature bank shares fell 12.2% in the wake of the decision to liquidate crypto lender Silvergate Bank. The drop comes despite Signature Bank’s moves to reduce its cryptocurrency exposure amid healthy despots at the company.
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uber technologies inc.
uber,
-4.97%
Shares fell 5% on Thursday after Bloomberg reported Wednesday that the ride-sharing package and food delivery company was considering a spin-off of its Uber Freight business. - Silvergate Capital Corp. shares fell 42.2% after La Jolla. The California-based lender said it would shut down operations and liquidate its crypto lender Silvergate Bank.
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Credit Suisse Group AG US Listed Stock CS,
-4.48%
It fell 4.5% after the Swiss bank said the release of its 2022 annual report would be delayed due to a late call from the Securities and Exchange Commission, which disputed its 2019 and 2020 cash flow statements. -
General Motors Co.. gm,
-4.88%
fell 4.9% after the automaker announced a voluntary buyout program that is expected to result in a $1.5 billion employee severance charge.
— Jamie Chisholm contributed to this article