NEW YORK (dpa-AFX) – Concerns about the US financial system continue to have a firm grip on Wall Street. After a brief attempt to stabilize in early trading, the most important indices continued their recent slide on Friday and each closed more than one percent in the red. Fears of loan defaults in the banking sector had increased again recently after efforts to rescue the ailing Silicon Valley Bank had failed for the time being. Against this background, positive impetus from the most recent labor market report fizzled out.
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The leading index Dow Jones Industrial fell by 1.07 percent to 31,909.64 points. On a weekly basis, this results in a minus of 4.44 percent. The market-wide S&P 500 fell 1.45 percent on Friday to 3861.59 points. The tech-heavy Nasdaq 100 fell 1.38 percent to 11,830.28 points.
The focus remained on the developments around the Silicon Valley Bank. On Thursday it became known that the financier of small and medium-sized tech and biotech companies needed a capital increase in the billions to cushion losses from the portfolio. But the negotiations about this have apparently failed for the time being: On Friday, the Silicon Valley Bank was temporarily closed and placed under state control.
Technology companies are particularly suffering from the current high interest rates because they make their refinancing more difficult. There is also the risk that loans can no longer be serviced. High interest rates also depress company valuations, since in such an environment the profits forecast for the future are worth less from today’s perspective. Silicon Valley Bank customers from the tech industry had recently withdrawn deposits because they needed liquidity themselves.
Trading in the papers of the ailing company SVB Financial, the parent company of Silicon Valley Bank, is currently suspended after a price slump. The high price losses of many bank shares the day before in the wake of SVB Financial have clouded the mood for the industry as a whole. Thursday saw the biggest sell-off in the banking sector in almost three years, as the KBW Bank Index tumbled 7.7 percent.
This much-noticed industry barometer has now lost 3.9 percent. Goldman Sachs shares fell 4.2 percent in the Dow. At the bottom of the S&P 500, Signature Bank’s shares fell 22.9 percent. However, JPMorgan’s shares bucked the trend and rose by 2.5 percent.
At the end of the Dow, the papers of the construction machinery manufacturer Caterpillar fell by 5.8 percent after a skeptical analyst comment from the major Swiss bank UBS. Investors underestimate the extent to which growth is slowing, wrote expert Steven Fisher.
The euro rose and was last listed at 1.0637 US dollars. In view of the development of the unemployment rate and hourly wages in February, the markets apparently grew expectation that the central bank could only raise its key interest rate by 0.25 percentage points on March 22 in order to counter the high inflation. The European Central Bank had previously set the reference rate at 1.0586 (Thursday: 1.0554) dollars. The dollar thus cost 0.9446 (0.9475) euros.
US government bonds benefited noticeably from the restrained interest rate expectations: the futures contract for ten-year bonds (T-Note Future) rose by 1.51 percent to 113.17 points. In return, the yield on ten-year government bonds fell to 3.69 percent
— By Lutz Alexander, dpa-AFX —
Source: dpa-AFX
