Stock Market Rally Reverses Sharply Lower as Bank Worries Emerge

Strategic Insights -

The stock market rally abruptly reversed sharply lower on Thursday as concerns about banks' financials arose, with SVB Financial plummeting 60% and Silvergate Capital announcing its shutdown. The Dow Jones Industrial Average suffered a 1.7% loss, while the S&P 500 and Nasdaq composite declined 1.85% and 2.05%, respectively. Bank stocks were among the hardest-hit, with SIVB stock continuing to plunge late.

Key Takeaways:

  • SVB Financial stock plummeted 60% to 106.04, the lowest price since 2016, due to concerns about its loans to the tech industry and dwindling deposits.
  • Silvergate Capital announced its shutdown, with its Silvergate Bank liquidating, and its stock price plummeted 42%.
  • Bank of America, JPMorgan Chase, Wells Fargo, and Charles Schwab were among the high-profile losers, with BAC stock retreating 6.2% and WFC stock losing 6.2%.
  • The S&P 500 and Nasdaq composite declined 1.85% and 2.05%, respectively, with the Russell 2000 plummeting 2.8%.
  • The February jobs report will be released at 8:30 a.m. ET and is expected to show nonfarm payrolls up by 223,000, a slowdown from January's 517,000, but still a strong two-month start to the year.
  • The jobless rate is expected to hold at a 53-year low of 3.4%, and average hourly earnings should climb 0.3%, with the annual pay gain picking up to 4.7%.
  • The stock market rally had a highly negative day, with a downside reversal damaging the major indexes and leading stocks.

Statistics:

  • SVB financial stock fell 60% to 106.04, the lowest price since 2016.
  • Silvergate Capital's stock price plummeted 42%.
  • BAC stock retreated 6.2% to its lowest levels since October.
  • WFC stock lost 6.2%, tumbling below its 50-day line after breaking below its 200-day earlier in the week.
  • The S&P 500 and Nasdaq composite declined 1.85% and 2.05%, respectively.
  • The Russell 2000 plummeted 2.8%.
  • The 10-year Treasury yield fell 10 basis points to 3.82%.
  • The two-year Treasury yield plunged 11 basis points to 4.79%.
  • Crude oil futures fell slightly.
  • Fed rate hike expectations shifted, but not by much, with markets seeing a 60% chance of a 50-basis-point move on March 22, down from Wednesday's 78.6%.

Sources:

  • Bloomberg
  • Labor Department
  • Challenger, Gray & Christmas
  • Oracle
  • Ulta Beauty
  • S&P 500
  • Nasdaq composite
  • Dow Jones Industrial Average
  • Russell 2000
  • 10-year Treasury yield
  • Two-year Treasury yield
  • Crude oil futures