Wall Street ends scattered, markets resist despite banking jitters
Against the backdrop of a sharp fall in bond rates, the New York Stock Exchange ended on a mixed note on Monday as huge capitalization and defensive stocks outpaced the banking sector’s slide.
The Dow Jones fell 0.28%, the Nasdaq fell 0.45% and the broader S&P 500 fell 0.15%.
Wall Street opened in the red, battered by the crisis hitting the US banking sector for several days, forcing US authorities on Sunday to guarantee all deposits of US customers.
But the indices recovered quickly, to end up around equilibrium, “thanks to interest rate-sensitive sectors falling in bond yields”, explained Edward Moya in a note. from Onda.
The yield on 2-year government bonds thus declined by about 0.6 percentage point to 3.99% from 4.58% at Friday’s close. In three days, it experienced the biggest drop since the famous Black Monday of October 19, 1987.
Operators have drastically revised their projections in terms of monetary policy and now expect the Fed to cap and then lower its rates by the end of the year, while they still count on a continuation of Friday’s forced tightening .
This approach and the sharp fall in bond yields have benefited some companies in the technology sector, which rely heavily on debt terms to finance their continued growth.
Semiconductor makers Broadcom (+0.27%) and Texas Instruments (+1.31%) took the opportunity to finish in the green.
The New York market has also been able to rely on “mega-caps”, huge capitalizations, many of which come from the technology sector. Patrick O’Hare of Briefing.com commented, “They have solid balance sheets and present no immediate risk.”
Apple (+1.33%), Microsoft (+2.14%) and Amazon (+1.87%), with a combined weight of over $4,000 billion, pulled up the hurdles on their own.
Another positive note is the support of defensive stocks, which are theoretically less sensitive to economic conditions, such as Johnson & Johnson (+0.96%), Procter & Gamble (+0.69%) or Coca-Cola (+1.01%) .
The pharmaceutical sector, also considered defensive, was boosted by the announcement of the acquisition of biotech CGen (+14.51%) specializing in cancer treatment by pharmaceutical giant Pfizer (+1 .19%). 43 billion dollars.
Biotech Amgen (+2.33%) was in demand, as were laboratories Moderna (+6.95%) or Eli Lilly (+3.01%).
If all these factors have enabled Wall Street to resist, Nick Reiss of Guinness Global Investors indicated, “concerns remain about regional banks”.
“Some people are scared of new bankruptcies, of seeing the value of (these banks’) operations eroded and say that’s not a risk they want to take”, the manager continued.
On the front line, Californian establishment First Republic slashed 61.83% in Monday’s session alone.
Despite its status as a regional bank, First Republic is nevertheless the 14th largest financial institution in the United States with over $212 billion in assets.
She was not alone in the eyes of investors. Other regional brands suffered losses, notably Western Alliance (-47.06%), Cleveland Bank KeyCorp (-24.36%) or Texas establishment Comerica Bank (-27.67%).
According to Patrick O’Hare, “there are still fears these regional banks could face a slump in their deposits as customers panic about what has just happened”.
Most of the victims of the fire on Monday still reduced their losses at the end of the session. After climbing to its highest level in four months, the VIX index, which measures market volatility, also slowed before the close, a sign that the market was coming to its senses.