Fear shook the New York Stock Exchange and stock prices tumbled on concerns about what would be next to go bankrupt under the weight of rising interest rates after the biggest US bank failure in nearly 15 years.
The index Standard & Poor’s 500 fell 1.4 percent, capping its worst week since September. All this despite the release of a much-anticipated report on Friday that showed workers’ wage increases are slowing and gave other signs that Wall Street wants to see inflationary pressures cool.
industrial average Dow Jones fell 345 points, or 1.1 percent, and the composite Nasdaq decreased 1.8 percent.
Some of the steepest declines in the market occurred again in the financial sector, where shares plunged for the second day in a row.
Regulators took over the bank Silicon Valley in a surprise move at midday after shares in its parent company, SVB Financial, plunged more than 60 percent this week.
The company, which served the sector surrounding start-ups, was trying to raise cash to alleviate a crisis. Analysts have said its situation was relatively unique, but it has nonetheless raised concerns that a broader banking crisis could break out.
Friday’s troubles occurred amid what strategists at a report from Bank of America Global Research they called the restless vibrations of March. Markets have been on edge on concerns that high inflation is proving hard to tame, which could force the Federal Reserve to accelerate its interest rate hikes.
Said hikes can reduce inflation by slowing down the economy, but cause declines in the prices of stocks and other investments. They also increase the risk of a recession occurring later.
Among other signs of a cooling but still resilient job market, the unemployment rate went up and the percentage of Americans who have or are looking for a job increased slightly.
These trends mean traders are backing off bets that the Federal Reserve will reapply an increase of 0.50 percentage points at the end of this month. They are now mostly betting on a more modest 0.25 point hike, according to CME Group.
The yield on the 10-year Treasury fell from 3.91 to 3.69 percent, a sharp movement for the bond market.
The biggest losses were registered in the regional banks. First Republic Bank plunged 14.8 percent. It filed a statement with regulators to reiterate its strong capital and liquidity positions.
The biggest banks, which have been subjected to stress tests by regulators after the 2008 financial crisis, fared better. Proof of this is that JPMorgan Chase rose 2.5 percent.
In total, the Standard & Poor’s 500 fell 56.73 points to settle at 3 thousand 861.59. the dow lost 345.22 units and closed at 31,909.64, while the Nasdaq Composite Index fell 199.47standing at 11 thousand 138.89.
With information from AP
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