Wall Street is falling due to fears of a banking crisis

March 17 (Reuters) – Major U.S. stocks fall on Friday amid investor fears of a potential banking crisis, even as major U.S. banks bail out regional lender First Republic Bank.

The Dow Jones Index fell 1.17% to 31,868.67 points at 17:39 GMT, the S&P 500 fell 0.99% to 3,921.13 points and the Nasdaq fell 0.63% to 11,642.87 points .

First Republic shares, which were previously bought up by major US banks including JPMorgan Chase & Co and Morgan Stanley, fell 20.7% early in the session after the lender suspended dividend payments.

SVB Financial said on Friday it had filed for a court-supervised reorganization under bankruptcy protection in hopes of finding buyers for its assets. A few days earlier, its former Silicon Valley Bank branch was taken over by US regulators.

PacWest Bancorp and Western Alliance fell 12.53% and 12.08% respectively.

JPMorgan, Citigroup and Wells Fargo shares also lost 3.18% to 3.99%.

Most of the 11 major sectors of the S&P 500 are also negative. “Deposits flowed from regional banks like the First Republic to the big banks that are now bailing them out by returning the deposits. But that doesn’t solve the problem,” said Thomas Hayes of Great Hill Capital LLC.

“Until you stop the outflow of deposits from regional banks to systemically important banks that are too big to fail, it doesn’t matter how much money you put in the basket.”

The European Central Bank raised interest rates by 50 basis points on Thursday. The ECB’s supervisory board found no signs of the crisis spreading to eurozone banks on Friday after the recent turmoil involving Silicon Valley Bank and Credit Suisse.

Investors are anxiously waiting for next week’s Fed rate decision.

Rising stocks of major market giants such as Microsoft and Alphabet rose 1.67% and 1.15% respectively as US Treasury yields fell, providing some support for the Nasdaq.

Money market participants now expect the Fed to raise interest rates by 25 basis points on March 22 with a probability of 72%. .

Fed Chairman Jerome Powell and his colleagues are faced with the need to react in real time to shocks in the banking system. These events are changing domestic and international financial conditions overnight and even hourly. And all this is happening before the Fed meeting – at a time when central bank officials cannot comment on the situation and its impact on monetary policy.

The US Federal Reserve will raise interest rates by 25 basis points at its March meeting amid new turmoil in the banking sector, the vast majority of economists polled by Reuters believe. However, respondents were divided on the risks to their final interest rate projections.

Fed data on Friday showed that US industrial production in February remained at January’s level.

On a positive note, FedEx Corp jumped 7.93% after the parcel delivery service raised its full-year profit guidance.

Original message in English available at the code: (Shubham Batra and Amruta Khandekar in Bangalore, with Shristi Achar A)


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