Market Update
European Markets Jumped 2% Amid Lingering Worries of Interest Rate Risks On Banks
Bridgette Randall
14 Mar, 2023
Frankfurt
European markets rebounded on Tuesday following the worst one-day loss in the previous session in 2023 on concerns of wider fallout from the collapse of Signature Bank and Silicon Valley Bank in the U.S.
Stock indexes jumped as much as 2% and bond yields edged lower after nervous investors looked for more information on the health of the U.S. banking system.
The swift actions from U.S. regulators and governments bailed out uninsured depositors and calmed nervous markets for now, but worries of more bank failures remained.
Rising interest rates in the U.S. and the Euro Area are causing turmoil in the bond portfolio of banks and with every basis point increase in interest rates is going to add more losses.
"The result is that most banks have some amount of unrealized losses on securities. The total of these unrealized losses, including securities that are available for sale or held to maturity, was about $620 billion at year-end 2022.
Unrealized losses on securities have meaningfully reduced the reported equity capital of the banking industry," noted FDIC Chairman Martin Gruenberg in his prepared remarks on March 6 delivered at an industry conference.
Indexes & Yields
The DAX index increased 1.8% to 15,232.83, the CAC-40 index rose 1.9% to 7,141.57 and the FTSE 100 index jumped 1.2% to 7,637.11.
The yield on 10-year German Bunds inched higher to 2.42%, French bonds edged up to 2.95%, the UK gilts to 3.48% and Italian bonds to 4.27%.
The euro edged up to $1.074, the British pound advanced to $1.217 and the Swiss franc to 91.29 cents.
Brent crude oil fell $2.20to $78.58 a barrel and the Dutch TTF natural gas fell 9% to Є45.09 per MWh.
Europe Stock Movers
Energy explorers and refiners were among the decliners after Brent crude and natural gas prices extended losses to the fifth session in a row.
BP Plc declined 0.5% but Shell, TotalEnergies and Repsol gained between 1% and 1.5%.
Resource stocks were on the defensive following the decline in copper and iron ore prices by 1%.
Glencore, Antofagasta and Anglo American fell between 1% and 3%.
Volkswagen AG decreased 1.6% to €128.40 and the German automobile maker said it plans to invest €180 billion between 2023 and 2027 in "in the most attractive profit pools and regions, with more than two-thirds allotted for electrification and digitalization."
Total vehicle sales declined 7% to 8.3 million worldwide in 2022.
Group revenue in the full-year 2022 increased 12% to €279 billion and earnings after-tax increased 2.6% to €15.8 billion.
The automotive group reported an annual dividend of €8.70 per common share, an increase from €7.50 a year ago.
Credit Suisse AG declined as much as 4.5% before closing down 0.8% to Sfr 2.24 after the troubled Swiss-lender admitted "material weaknesses" in its financial reporting processes.
Casino Guichard Perrachon SA increased 7.3% to €8.35 after the French discount grocery chain said it plans to sell additional stake in the Brazil-based cash and carry chain Assai.
The company plans to sell its 13% stake or 174 million shares through a secondary public offering and raise between €550 million and €600 million.
Assicurazioni Generali SpA advanced 2.4% to €18.34 after the Italian insurance company reported record operating profit in 2022.
Major Averages Advanced After February Inflation Eased, Regional Banks Rebounded
Barry Adams
14 Mar, 2023
New York City
Stocks rebounded on Tuesday after consumer inflation matched expectations and regional banks trimmed losses of previous three trading days.
Consumer price index rose at a slower pace in February after energy prices eased but core inflation accelerated following the surge in housing costs.
The easing of overall inflation powered the morning rally and benchmark indexes advanced between 1% and 2%.
Regional banks also rebounded between 15% and 40% after three days of steep losses following the collapse of three banks in less than a week.
Despite today's rebound, the banking sector is not out of the woods and more significant declines may be ahead.
Banking sector has unrealized losses of $620 billion linked to Treasury notes and bonds holdings, and higher rates for longer will only expand these losses.
Moreover, small and mid-sized banks approaching investors to shore up capital may spook depositors and start a bank run that may not be easy to prevent.
Moody's Investor Services lowered its view on the U.S. banking system to "negative" from "stable" citing liquidity, earnings and capital worries.
“Banks with substantial unrealized securities losses and with non-retail and uninsured US depositors may still be more sensitive to depositor competition or ultimate flight, with adverse effects on funding, liquidity, earnings and capital,” the rating agency noted in a report.
Belatedly, Moody's removed all its rating on Signature Bank and placed six mid-sized banks on its watch list with a view to downgrade bank ratings.
Comercia, INTRUST Financial, First Republic Bank, UMB Financial Corp, Western Alliance and Zions Bancorp are on Moody's watch list.
February CPI Slowed, Core Rate Accelerated
The consumer price inflation eased to 6.0% in February from 6.4% in January, the U.S. Labor Department reported Tuesday. The price increase was the smallest since September 2021.
On a monthly basis, the overall index increase slowed to 0.4% in February from 0.5% in January.
The shelter index was the largest contributor to the overall inflation accounting for 70% of total increase in the month.
Core prices excluding food and energy accelerated to 0.5% in February from 0.4% in January and rose 5.5% on an annual basis.
The energy index slowed to 5.2% in February from 8.7% in the previous month, the food index increase slowed to 9.5% from 10.1% but the shelter index jumped to 8.1% from 7.9%.
Indexes & Yields
The S&P 500 index increased 1.8% to 3,926.42 and the Nasdaq Composite index soared 2.3% to 11,444.02.
The yield on 2-year Treasury notes increased 31 basis points to 4.35%, 10-year Treasury notes jumped 15 basis points to 3.66% and 30-year Treasury bonds jumped 9 basis points to 3.75%.
Crude oil fell 93 cents to $73.79 a barrel and natural gas fell 4 cents to $2.55 a thermal unit.
U.S. Stock Movers
Regional banks rebounded a day after several regional banks fell between 30% and 60%.
First Republic Bank jumped 54% to $48.01, Western Alliance Bancorp rebounded 38.9% to $36.05 and KeyCorp advanced 11.5% to $11.25.
Stocks of order delivery firms and ride-sharing companies jumped after a California appeals court permitted companies to classify their drivers as independent contractors and not employees.
Uber Technologies Inc gained 6% to $32.72, Lyft Inc increased 5.6% to $8.90 and DoorDash Inc advanced 6.8% to $57.47.
Credit Suisse AG declined 2% to $2.22 after the Swiss bank said it has discovered "material weakness" in its financial reporting processes.
United Airlines Holdings Inc decreased 4.7% to $46.52 after the airline forecasted first quarter loss citing higher fuel costs and weaker demand growth.
The international airline estimated adjusted loss in the range of 60 cents and $1.0 compared to its previous estimate of a profit between 50 cents and $1.0.
Cvent Holding Corp jumped 12.3% to $8.30 after the event technology firm agreed to be acquired by Blackstone controlled private equity funds for $8.50 a share or $4.6 billion of enterprise value.
GitLab Inc plunged 32.6% to $30.71 after the cloud computing software company estimated sharply lower revenue in 2024.
The software services provider estimated revenue to fall between $529 million and $533 million in 2024.
Revenue in the fourth quarter increased 58% to $122.9 million from $77.8 million and loss attributable to shareholders fell to $38.7 million from $45.8 million and diluted loss per share shrank to 26 cents to 32 cents a year ago.
Consumer Inflation Slowed, Core Rate Accelerated In February
Brian Turner
14 Mar, 2023
New York City
The consumer price inflation eased to 6.0% in February from 6.4% in January, the U.S. Labor Department reported Tuesday. The price increase was the smallest since September 2021.
On a monthly basis, the overall index increase slowed to 0.4% in February from 0.5% in January.
The shelter index was the largest contributor to the overall inflation accounting for 70% of total increase in the month.
Core prices excluding food and energy accelerated to 0.5% in February from 0.4% in January and rose 5.5% on an annual basis.
The energy index slowed to 5.2% in February from 8.7% in the previous month, the food index increase slowed to 9.5% from 10.1% but the shelter index jumped to 8.1% from 7.9%.
Movers: Cvent, DoorDash, GitLab, First Republic Bank, Lyft, Uber Technologies
Scott Peters
14 Mar, 2023
New York City
Regional banks rebounded a day after several regional banks fell between 30% and 60%.
First Republic Bank jumped 54% to $48.01, Western Alliance Bancorp rebounded 38.9% to $36.05 and KeyCorp advanced 11.5% to $11.25.
Stocks of order delivery firms and ride-sharing companies jumped after a California appeals court permitted companies to classify their drivers as independent contractors and not employees.
Uber Technologies Inc gained 6% to $32.72, Lyft Inc increased 5.6% to $8.90 and DoorDash Inc advanced 6.8% to $57.47.
Credit Suisse AG declined 2% to $2.22 after the Swiss bank said it has discovered "material weakness" in its financial reporting processes.
United Airlines Holdings Inc decreased 4.7% to $46.52 after the airline forecasted first quarter loss citing higher fuel costs and weaker demand growth.
The international airline estimated adjusted loss in the range of 60 cents and $1.0 compared to its previous estimate of a profit between 50 cents and $1.0.
Cvent Holding Corp jumped 12.3% to $8.30 after the event technology firm agreed to be acquired by Blackstone controlled private equity funds for $8.50 a share or $4.6 billion of enterprise value.
GitLab Inc plunged 32.6% to $30.71 after the cloud computing software company estimated sharply lower revenue in 2024.
The software services provider estimated revenue to fall between $529 million and $533 million in 2024.
Revenue in the fourth quarter increased 58% to $122.9 million from $77.8 million and loss attributable to shareholders fell to $38.7 million from $45.8 million and diluted loss per share shrank to 26 cents to 32 cents a year ago.
Sharp Swing In Treasury Yields After Traders Bet On Rate Hike Pause
Barry Adams
13 Mar, 2023
New York City
Shocked investors shunned stocks and bond yields spiked after more questions were left unanswered following the sudden closure of three mid-sized banks.
In less than five days, three U.S. banks with a total deposits of $280 billion disappeared, raising questions about the effectiveness of bank regulators, auditors and rating agencies.
Global investors are looking for answers about how the central bank missed the client concentration, bank run in the making and its implications to the wider banking system.
Only a week ago Fed chairman Jerome Powell was reassuring lawmakers about the health of the U.S. financial system and supporting the narrative that banks are strong enough to sustain economic shocks.
Stocks gyrated in early trading following a flurry of weekend activities as regulators and central bankers worked together to prevent the bank run contagion from spreading.
Fed Trio Ramped Up Activities to Backstop SVB Fallout
Federal Reserve and Treasury Department officials worked on the weekend to work out details of the plan to provide financial assistance to the failed Silicon Valley Bank.
Regulators agreed to provide "financial backstop" to open the bank on Monday morning so the insured and uninsured depositors can access their accounts in full.
However, the stock and bondholders of the bank will not be bailed out, clarified the U.S. Treasury Secretary Janet Yellen in an interview with CBS Face the Nation.
The Federal Depositors Insurance Corporation, the insurance company that protects bank depositors, agreed to provide additional funds to support insured and uninsured accounts with the Silicon Valley Bank.
The move essentially makes sure that the losses from the fallout are paid by the banking industry and Wall Street and not the federal government.
The Federal Reserve also set up a separate program, Bank Term Funding Program to provide additional lending and extended term facility to one-year from the traditional 90 days in exchange of higher quality collateral valued at par and not at market value.
The additional banking facility is designed to provide emergency lending to banks that may need access to cash and prevent bank runs from spreading to other institutions.
The moves from the FDIC, Federal Reserve and the Treasury departments were widely welcomed by investors on Wall Street and depositors on Main Street.
"Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed.
Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law," noted the joint statement released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.
U.S. Indexes Rebound from Morning Lows
Stock indexes closed higher and rebounded from the morning losses after confidence recovered and banks retraced some of the losses of the day.
The S&P 500 index declined 0.2% to 3,855.76 and the Nasdaq Composite index increased 0.5% to 11,188.84.
Investors awaited the release of consumer price inflation data before the market opening on Tuesday.
Largest Drop In 3-day Treasury Yields Since 1987
The bond yields edged lower and extended 3-day losses to the largest since 1987 after investors rushed to buy U.S. Treasuries following the close down of three banks in less than a week.
The yield on 10-year Treasury notes moved by 50 basis points and 2-year Treasury notes by 90 basis points, the level volatility not seen in decades.
The yield on 2-year Treasury notes traded down to 3.97%, 10-year Treasury notes declined to 3.57% and 30-year Treasury bonds to 3.71%.
Crude oil declined $2.02 to $74.65 a barrel and natural gas rose 19 cents to $2.61 a thermal unit.
U.S. Stock Movers
Regional and mid-sized banks with large uninsured deposits led the decline for the third day in a row despite the additional assistance provided by the Federal Reserve Bank.
First Republic Bank plunged 75.6% to $19.95 and the San Francisco-based bank said on Sunday it has received "additional liquidity" from the Federal Reserve Bank and JPMorgan Chase & Co.
"The total available, unused liquidity to fund operations is now more than $70 billion. This excludes additional liquidity First Republic is eligible to receive under the new Bank Term Funding Program announced by the Federal Reserve today," the bank said in a filing with the SEC on Sunday.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks," added Jim Herbert, Founder and Executive Chairman and Mike Roffler, CEO and President.
PacWest Bancorp headquartered in Los Angeles, California dropped 42.43% to $7.11 and the Phoenix, Arizona based Western Alliance Bancorp plunged 69% to $15.20.
JPMorgan Chase decreased 1.6% to $131.60 and Bank of America fell 3.3% to $29.27.
European Markets Cautious Ahead of ECB Rate Decision
European markets fell sharply after banks declined for the second day in a row in the aftermath of the sudden collapse of Silicon Valley Bank.
Financial markets reacted negatively following the demise of three banks in less than five days and just a few days ago the Federal Reserve chairman assured investors and lawmakers that the financial system is sound.
The rapid demise of mid-sized banks with concentrated deposit bases also raised concerns about the effectiveness of the U.S. regulatory system, auditors and bond rating agencies.
Moreover, counterparty risks are still not known and may take a few days or even weeks before investors learn of links with European institutions.
Investors were also on the defensive ahead of the U.S. Consumer Price index data on Tuesday and the European Central Bank's rate decision on Thursday.
European Indexes Closed at 2-month Lows
The DAX index declined 3.04% to 14,959.47, the CAC-40 index dropped 2.90% and the FTSE 100 index fell 2.6% to 7,548.63.
European Bond Yields Dropped Following Worldwide Decline
The yield on 10-year German Bunds declined to 2.25%, French bonds fell to 2.79%,the UK gilts to 3.37% and the Italian bonds to 4.18%.
The euro inched higher to $1.074, the British pound edged up to $.218 and the Swiss franc closed at 91.11 cents.
Energy Prices Eased
Brent crude oil fell $2.16 to $80.15 a barrel and the Dutch TTF natural gas fell Є3.58 to Є48.88 per MWh.
Europe Movers
Banks were under pressure on the worries that the sudden and swift collapse of Silicon Valley Bank could spread to other banks in the face of the rising rate environment.
Credit Agricole, BNP, Societe Generale, Deutsche Bank, Lloyds Banking, Standard Chartered, Barclays and NatWest fell between 2% and 4%.
Three U.S. banks with a total of nearly $280 billion in deposits were closed down in less than a week and required emergency lending from the U.S. Federal Reserve Bank, U.S. Treasury and the FDIC to prevent the contagion spreading to other mid-sized banks.
SAP SE declined 2.9% to €107.22 after the German-software firm agreed to sell its majority stake in the U.S.-based Qualtrics International to Silver Lake and Canada Pension Plan Investment Board.
Qualtrics agreed to go private after investment companies offered a total of $121.5 billion or $18.15 a share.
SAP controlled about 61% of the company on a fully-diluted basis.
HSBC agreed to acquire Silicon Valley Bank's UK branch for £1 after the collapse of the California-based bank following the bank run.
HSBC agreed to pay the token amount to keep the operations running and continue to provide financial services to the start ups and young tech companies.
Phoenix Group Holdings PLC declined 2.3% to 603.65 pence after the UK-based insurance group reported wider loss in financial year 2022.
Net loss in the full-year 2022 expanded to £1.7 billion from £706 million in 2021 and assets under management declined to £259 billion from £301 billion in the previous year.
European Markets Close at 2-month Lows, SVB Fallout Worries
Bridgette Randall
13 Mar, 2023
Frankfurt
European markets fell sharply after banks declined for the second day in a row in the aftermath of the sudden collapse of Silicon Valley Bank.
Financial markets reacted negatively following the demise of three banks in less than five days and just a few days ago the Federal Reserve chairman assured investors and lawmakers that the financial system is sound.
The rapid demise of mid-sized banks with concentrated deposit bases also raised concerns about the effectiveness of the U.S. regulatory system, auditors and bond rating agencies.
Moreover, counterparty risks are still not known and may take a few days or even weeks before investors learn of links with European institutions.
Investors were also on the defensive ahead of the U.S. Consumer Price index data on Tuesday and the European Central Bank's rate decision on Thursday.
Indexes & Yields
The DAX index declined 3.04% to 14,959.47, the CAC-40 index dropped 2.90% and the FTSE 100 index fell 2.6% to 7,548.63.
The yield on 10-year German Bunds declined to 2.25%, French bonds fell to 2.79%,the UK gilts to 3.37% and the Italian bonds to 4.18%.
The euro inched higher to $1.074, the British pound edged up to $.218 and the Swiss franc closed at 91.11 cents.
Brent crude oil fell $2.16 to $80.15 a barrel and the Dutch TTF natural gas fell Є3.58 to Є48.88 per MWh.
Europe Movers
Banks were under pressure on the worries that the sudden and swift collapse of Silicon Valley Bank could spread to other banks in the face of the rising rate environment.
Credit Agricole, BNP, Societe Generale, Deutsche Bank, Lloyds Banking, Standard Chartered, Barclays and NatWest fell between 2% and 4%.
Three U.S. banks with a total of nearly $280 billion in deposits were closed down in less than a week and required emergency lending from the U.S. Federal Reserve Bank, U.S. Treasury and the FDIC to prevent the contagion spreading to other mid-sized banks.
SAP SE declined 2.9% to €107.22 after the German-software firm agreed to sell its majority stake in the U.S.-based Qualtrics International to Silver Lake and Canada Pension Plan Investment Board.
Qualtrics agreed to go private after investment companies offered a total of $121.5 billion or $18.15 a share.
SAP controlled about 61% of the company on a fully-diluted basis.
HSBC agreed to acquire Silicon Valley Bank's UK branch for £1 after the collapse of the California-based bank following the bank run.
HSBC agreed to pay the token amount to keep the operations running and continue to provide financial services to the start ups and young tech companies.
Phoenix Group Holdings PLC declined 2.3% to 603.65 pence after the UK-based insurance group reported wider loss in financial year 2022.
Net loss in the full-year 2022 expanded to £1.7 billion from £706 million in 2021 and assets under management declined to £259 billion from £301 billion in the previous year.
Qualtrics Agrees to Go Private for $12.5 Billion
Scott Peters
13 Mar, 2023
New York City
Qualtrics International surged 6.7% to $17.66 after the company agreed to go private for $18.15 a share or $12.5 billion.
Silver Lake and Canada Pension Plan Investments agreed to acquire 100% of the cloud software firm and SAP agreed to sell its 61% stake on a fully-diluted basis in the company it acquired for $8 billion in 2018.
The deal was approved by the board of directors and the committee of independent directors of the company and SAP's board also approved the deal.
Qualtrics stock has declined 33% in the last 52-week of trading.
Qualtrics will continue to be led by Chief Executive Officer Zig Serafin, and the company will remain headquartered in Provo, Utah and Seattle, Washington.
After the deal is completed, Qualtrics and SAP intend to maintain a go-to-market and technology partnership to both service existing joint customers and target new customer opportunities.
Qualtrics' customer survey platform is used by more than 18,00 companies.
Total revenues in the full-year 2022 jumped to $1.5 billion and net loss expanded to $1.1 billion from revenue in $1.1 billion and a net loss of $1.6 billion in 2021.
Movers: Charles Schwab, Etsy, First Republic, Qualtrics, Signature Bank
Scott Peters
13 Mar, 2023
New York City
Regional and mid-sized banks with large uninsured deposits led the decline for the third day in a row despite the additional assistance provided by the Federal Reserve Bank.
First Republic Bank plunged 75.6% to $19.95 and the San Francisco-based bank said on Sunday it has received "additional liquidity" from the Federal Reserve Bank and JPMorgan Chase & Co.
"The total available, unused liquidity to fund operations is now more than $70 billion. This excludes additional liquidity First Republic is eligible to receive under the new Bank Term Funding Program announced by the Federal Reserve today," the bank said in a filing with the SEC on Sunday.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks," added Jim Herbert, Founder and Executive Chairman and Mike Roffler, CEO and President.
PacWest Bancorp headquartered in Los Angeles, California dropped 42.43% to $7.11 and the Phoenix, Arizona based Western Alliance Bancorp plunged 69% to $15.20.
JPMorgan Chase decreased 1.6% to $131.60 and Bank of America fell 3.3% to $29.27.
Signature Bank was halted after regulators seized the crypto-focused bank in New York citing systemic risk.
Signature Bank had total deposits of $89 billion as of the end of the year 2022 and suffered an outflow of $10 billion in deposits on Friday following the collapse of the Silicon Valley Bank.
Signature Bank had expanded to crypto assets in 2018 and about 30% of its deposits were linked to crypto currencies.
Charles Schwab Corporation declined 10.1% to $52.74 following the wider decline in regional banks and the financial services sector.
Schwab reiterated its financial condition and portfolio of deposits and assets are different from traditional banks.
"Our banks’ loan-to-deposit ratio is approximately 10% and nearly all the loans are over-collateralized by first-lien mortgages or securities.
The remainder of our assets are invested in high-quality, liquid securities in either our available-for-sale portfolio, working capital at the parent or broker-dealer subsidiaries, or in our held-to-maturity portfolio," said the company in a statement released on Monday.
Etsy Inc declined 1.5% to $104.32 after the online marketplace operator said that the collapse of Silicon Valley Bank is causing delays in processing payments but normal processing is expected to resume as early as Monday.
The processing difficulties for the last three days are not likely to have a material impact on its quarterly results.
Qualtrics International surged 6.7% to $17.66 after the company agreed to go private for $18.15 a share or $12.5 billion.
Silver Lake and Canada Pension Plan Investments agreed to acquire 100% of the cloud software firm and SAP agreed to sell its 61% stake on a fully-diluted basis in the company it acquired for $8 billion in 2018.
Qualtrics stock has declined 33% in the last 52-week of trading.
Federal Reserve, FDIC and Treasury Department Move to Stop SVB Contagion from Spreading
Barry Adams
13 Mar, 2023
New York City
Stocks gyrated in early trading following a flurry of weekend activities as regulators and central bankers worked together to prevent the bank contagion run from spreading.
Federal Reserve and Treasury Department officials worked on the weekend to work out details of the plan to provide financial assistance to the failed Silicon Valley Bank.
Regulators agreed to provide "financial backstop" to open the bank on Monday morning so the insured and uninsured depositors can access their accounts in full.
However, the stock and bondholders of the bank will not be bailed out, clarified the U.S. Treasury Secretary Janet Yellen in an interview with CBS Face the Nation.
The Federal Depositors Insurance Corporation, the insurance company that protects bank depositors, agreed to provide additional funds to support insured and uninsured accounts with the Silicon Valley Bank.
The move essentially makes sure that the losses from the fallout are paid by the banking industry and Wall Street and not the federal government.
The Federal Reserve also set up a separate program, Bank Term Lending Facility to provide additional lending and extended term facility to one-year from the traditional 90 days in exchange of higher quality collateral valued at par and not at market value.
The additional banking facility is designed to provide emergency lending to banks that may need access to cash and prevent bank runs from spreading to other institutions.
The moves from the FDIC, Federal Reserve and the Treasury departments were widely welcomed by investors on Wall Street and depositors on Main Street.
"Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed.
Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law," noted the joint statement released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.
Indexes & Yields
The S&P 500 index declined 0.1% to 3,856.48 and the Nasdaq Composite index increased 0.1% to 11,151.52.
The yield on 2-year Treasury notes traded down to 4.03%, 10-year Treasury notes declined to 3.45% and 30-year Treasury bonds to 3.85%.
Crude oil declined $1.02 to $75.65 a barrel and natural gas rose 18 cents to $2.61 a thermal unit.
Stock Movers
Regional and mid-sized banks with large uninsured deposits led the decline for the third day in a row despite the additional assistance provided by the Federal Reserve Bank.
First Republic Bank plunged 75.6% to $19.95 and the San Francisco-based bank said on Sunday it has received "additional liquidity" from the Federal Reserve Bank and JPMorgan Chase & Co.
"The total available, unused liquidity to fund operations is now more than $70 billion. This excludes additional liquidity First Republic is eligible to receive under the new Bank Term Funding Program announced by the Federal Reserve today," the bank said in a filing with the SEC on Sunday.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks," added Jim Herbert, Founder and Executive Chairman and Mike Roffler, CEO and President.
PacWest Bancorp headquartered in Los Angeles, California dropped 42.43% to $7.11 and the Phoenix, Arizona based Western Alliance Bancorp plunged 69% to $15.20.
JPMorgan Chase decreased 1.6% to $131.60 and Bank of America fell 3.3% to $29.27.
Silicon Valley Bank's Rapid Collapse Fueled Losses On Wall Street
Barry Adams
10 Mar, 2023
New York City
The rapid collapse of a major bank located in the Silicon Valley stunned the market and raised the memories of the worst of the Great Recession in 20008-09.
Silicon Valley Bank, the 16th largest bank in the U.S. with more than $175 billion in deposits suffered a bank run following its announcement to raise capital on Thursday following the losses in its bond portfolio.
The announcement was viewed by the highly interconnected venture community as a sign of larger trouble and urged its client companies to withdraw deposits.
The 40-year institution that survived many ups and downs of the tech industry was gone in 48 hours after social media posits ricocheted in the tech community urging employees and depositors to safeguard their bank funds.
The Silicon Valley Bank run lasted only two working days, forcing a sell-off in regional and smaller banks from coast to coat and dragged the market averages down in the final three hours of trading.
The Silicon Valley Bank's collapse is the second largest bank failure in U.S. history following the demise of Washington Mutual Bank in 2008 with a deposit base of $188 billion.
The turmoil in bank stocks overshadowed the February jobs report showing a robust employment market but investors focused on a moderate wage gain and interpreted a decline in inflationary pressures.
Employers expanded payrolls at a brisk pace and businesses in leisure and hospitality, education and healthcare led the gains.
The latest employment report offered another signal to policymakers as consumers shift spending to services and experiences from goods, driving the demand higher in travel and hospitality segments.
Service inflation, excluding the housing market, is still running ahead of the overall inflation by a wider margin, making it difficult for policymakers to decide the future rate path.
Crude oil and natural gas prices turned lower in volatile trading and hovered near recent one-year lows.
While stocks accelerated declines, bond yields plunged after wage gains moderated, lifting hopes that policymakers may stick to smaller interest rate hikes of 25 basis points at the next meeting in two weeks.
Strong Job Gains In February
Total nonfarm payroll employment increased 311,000 in February following the downwardly revised 504,000 in January, the U.S. Bureau of Labor Statistics reported Friday.
Both the unemployment rate, at 3.6%, and the number of unemployed persons, at 5.9 million, edged up in the month.
February payroll gain took the six-month average to 343,000 with notable job gains occurring in leisure and hospitality, retail trade, government, and health care.
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents, or 0.2%, to $33.09 and increased 4.6%.
Stock Indexes Trend Lower
Banks were added to the list of declining sectors including home builders, technology and specialty retailers.
A total of 31 stocks in the widely followed S&P 500 index traded at new 52-week lows.
The S&P 500 index dropped 1.5% to 3,861.59 and the Nasdaq Composite index declined 1.7% to 11,38.89.
For the week, the S&P 500 index dropped 4.6% and the Nasdaq Composite index fell 4.7%.
Bond Yields Dropped After Wage Gains Moderated In February
The yield on 2-year Treasury notes dropped 23 basis points to 4.59%, 10-year Treasury notes declined 31 basis points to 3.68% and 30-year Treasury bonds fell 18 basis points to 3.69%.
Crude oil price increased 83 cents to $76.55 a barrel and natural gas price fell 10 cents to $2.43 a thermal unit.
U.S. Stock Movers
Banks drifted lower after Silicon Valley Bank's parent announced a plan to raise as much as $2 billion.
Regional banks M&T Bank, Fifth & Third Bank, KeyCorp, Comercia and Signature Bank declined between 2% and 5%.
Allbirds Inc plunged 44% to $1.34 after the company said quarterly sales declined for the first time in its history and also announced a restructuring plan including shakeup in executive ranks.
Oracle Corporation declined 2.7% to $84.46 after the database company reported, slightly lower-than-expected, revenue of $12.4 billion in its latest quarter.
Gap Inc declined 3.5% to $11.07 after the specialty apparel retailer reported a fall in quarterly revenue and larger loss.
European markets closed lower on the final day of the week and investors reviewed inflation and trade data in the region.
Germany's inflation held steady in February and France's trade deficit shrank in January after the fall in energy prices but Spain's retail sales surged following the increase in non-food sales.
Investors also reviewed the latest U.S. employment report which showed solid gains in February.
Nonfarm payrolls increased 311,000 in February after business in leisure and hospitality and education and healthcare expanded payrolls, the U.S. Labor Department reported on Friday.
However, the wage gains moderated and jobless rate increased to 3.6% from 3.4% in the previous month.
Germany's Inflation Held Steady In February
Germany's consumer inflation held steady in February as previously reported, DeStatis or the Federal Statistics Office said on Friday.
The consumer price index increased 8.7% in the month matching the flash estimate and inflation rate in December.
Core inflation, which excludes energy and food, rose 5.7% in February.
Energy inflation from a year ago slowed to 19.1% in February from 23.1% in the previous month however food inflation accelerated to 21.8%, following a 20.2% increase in January.
Goods inflation slowed to 12.4% and service inflation was 4.7% in February.
Harmonized index of consumer prices on an annual basis increased to 9.3% in February from 9.2% in January and increased to 1.0% from 0.5% in the previous month.
France's Trade Deficit Shrank In January
The recent decline in energy prices helped France to shrink its international trade gap, the Customs Office said in a report Friday.
International trade deficit shrank to Є12.9 billion in January from Є14.7 billion in December but the trade gap rose from Є8.7 billion in similar month a year ago.
On a monthly basis, exports fell 2.2% and imports declined 4.5% from the previous month in January.
From the previous year, exports increased 9.8% and imports advanced 15.7%.
Spain's Retail Sales Advanced for the Second Month In a Row
Spain's retail sales rose 5.5% in January following the 4.8% rise in December, the statistics office INE said in a report on Friday.
Retail sales expanded at the fastest pace in 20 months after non-food products sales rose 15.7% and food products sales decreased 1.7%.
European Indexes & Yields
Banks led the decliners and leading banks in Germany, UK, France and Spain fell between 3% and 6% following a bank run in the U.S.
Silicon Valley Bank with bank deposits of $175 billion was closed down by the industry regulators after customer deposits accelerated.
The DAX index declined 1.3% to 15,427.97, the CAC-40 index fell 1.3% to 7,220.67 and the FTSE 100 index dropped 1.7% to 7,748.35.
The yield on 10-year German Bunds eased to 2.46%, French bonds fell to 2.96%, UK gilts to 3.6% and Italian bonds to 4.3%.
The euro inched higher to $1.06, the British pound to $1.201 and the Swiss franc to 92.1 cents.
Brent crude oil increased $1.20 to $82.87 a barrel and the Dutch TTF natural gas increased Є8.80 to Є52.40 per MWh.
Europe Movers
Casino Guichard Perrachon SA declined 5.6% to €8.12 after the French discount grocery store chain reported a smaller loss in the full-year 2022.
Sandvik AB decreased 3.3% to kr 208.0 after the Swedish engineering company said it plans to set up a new production unit in Malaysia and invest kr 350 million over the next three years.
Berkeley Group Holdings PLC decreased 0.5% to 4,015.17 pence after the UK-based homebuilder held its 2023 outlook despite the ongoing economic slowdown.
European Markets Extended Weekly Losses, German Inflation Held Steady
Bridgette Randall
10 Mar, 2023
Frankfurt
European markets closed lower on the final day of the week and investors reviewed inflation and trade data in the region.
Germany's inflation held steady in February and France's trade deficit shrank in January after the fall in energy prices but Spain's retail sales surged following the increase in non-food sales.
Investors also reviewed the latest U.S. employment report which showed solid gains in February.
Nonfarm payrolls increased 311,000 in February after business in leisure and hospitality and education and healthcare expanded payrolls, the U.S. Labor Department reported on Friday.
However, the wage gains moderated and jobless rate increased to 3.6% from 3.4% in the previous month.
Germany's Inflation Held Steady In February
Germany's consumer inflation held steady in February as previously reported, DeStatis or the Federal Statistics Office said on Friday.
The consumer price index increased 8.7% in the month matching the flash estimate and inflation rate in December.
Core inflation, which excludes energy and food, rose 5.7% in February.
Energy inflation from a year ago slowed to 19.1% in February from 23.1% in the previous month however food inflation accelerated to 21.8%, following a 20.2% increase in January.
Goods inflation slowed to 12.4% and service inflation was 4.7% in February.
Harmonized index of consumer prices on an annual basis increased to 9.3% in February from 9.2% in January and increased to 1.0% from 0.5% in the previous month.
France's Trade Deficit Shrank In January
The recent decline in energy prices helped France to shrink its international trade gap, the Customs Office said in a report Friday.
International trade deficit shrank to Є12.9 billion in January from Є14.7 billion in December but the trade gap rose from Є8.7 billion in similar month a year ago.
On a monthly basis, exports fell 2.2% and imports declined 4.5% from the previous month in January.
From the previous year, exports increased 9.8% and imports advanced 15.7%.
Spain's Retail Sales Advanced for the Second Month In a Row
Spain's retail sales rose 5.5% in January following the 4.8% rise in December, the statistics office INE said in a report on Friday.
Retail sales expanded at the fastest pace in 20 months after non-food products sales rose 15.7% and food products sales decreased 1.7%.
Indexes & Yields
Banks led the decliners and leading banks in Germany, UK, France and Spain fell between 3% and 6% following a bank run in the U.S.
Silicon Valley Bank with bank deposits of $175 billion was closed down by the industry regulators after customer deposits accelerated.
The DAX index declined 1.3% to 15,427.97, the CAC-40 index fell 1.3% to 7,220.67 and the FTSE 100 index dropped 1.7% to 7,748.35.
The yield on 10-year German Bunds eased to 2.46%, French bonds fell to 2.96%, UK gilts to 3.6% and Italian bonds to 4.3%.
The euro inched higher to $1.06, the British pound to $1.201 and the Swiss franc to 92.1 cents.
Brent crude oil increased $1.20 to $82.87 a barrel and the Dutch TTF natural gas increased Є8.80 to Є52.40 per MWh.
Europe Movers
Casino Guichard Perrachon SA declined 5.6% to €8.12 after the French discount grocery store chain reported a smaller loss in the full-year 2022.
Sandvik AB decreased 3.3% to kr 208.0 after the Swedish engineering company said it plans to set up a new production unit in Malaysia and invest kr 350 million over the next three years.
Berkeley Group Holdings PLC decreased 0.5% to 4,015.17 pence after the UK-based homebuilder held its 2023 outlook despite the ongoing economic slowdown.
Movers: Allbirds, DocuSign, Gap, Oracle, SVB, Signature Bank, Vail Resorts
Scott Peters
10 Mar, 2023
New York City
SVB Financial Group was halted in the early trading and later in the day the FDIC announced the takeover of the bank after customer deposit withdrawals accelerated in the week.
The California Department of Financial Protection and Innovation assigned the bank's assets to the Federal Deposit Insurance Corporation, according to the press release by the regulator.
SVB carried a total deposit of $175.4 billion and assets of $209 billion at the end of 2022, according to the company documents.
Signature Bank plunged 21% to $71.35 following the closure of Silicon Valley Bank and troubles at Silvergate Capital Corp.
Regional banks M&T Bank, Fifth & Third Bank, KeyCorp, and Comercia declined between 2% and 5%.
Allbirds Inc plunged 44% to $1.34 after the company said quarterly sales declined for the first time in its history and also announced a restructuring plan including shakeup in executive ranks.
Revenue in the fourth quarter declined 13% to $84.2 million from $97.2 million and net loss expanded to $24.8 million from $10.4 million and diluted loss per share rose to 17 cents from 9 cents a year ago.
In the full-year 2022, revenue increased 7% to $297.8 million and net loss increased to $101.3 million from $45.4 million and diluted loss per share rose to 68 cents from 65 cents a year ago.
DocuSign Inc dropped 20.1% to $51.46 after the electronic signature platform operator reported revenue and earnings ahead of expectations.
The company also announced chief financial officer Cynthia Gaylor would step down in the next few months.
The e-signature company said revenue in the fourth quarter ending in January 14% to $659.6 million and the company swung to a profit of $4.8 million from a loss of $30.4 million and diluted earnings per share was 2 cents compared to a loss of 15 cents a year ago.
In the full-year 2022, revenue increased 19% to $2.5 billion and net loss expanded to $97.5 million from $70.0 million and diluted loss per share rose to 49 cents from 36 cents a year ago.
Gap Inc declined 3.5% to $11.07 after the specialty apparel retailer reported a fall in quarterly revenue and larger loss.
Revenue in the fourth quarter declined 6% to $2.4 billion and net loss expanded to $273 million from $16 million or diluted loss per share rose to 75 cents from 4 cents a year ago.
In the full-year 2022, revenue decreased to $15.6 billion from $16.7 billion and the company swung to a net loss of $202 million from a profit of 256 million and diluted earnings per share was ($0.55) compared to 67 cents a year ago.
Oracle Corporation declined 2.7% to $84.46 after the database company reported, slightly lower-than-expected, revenue of $12.4 billion in its latest quarter.
Revenue in the fiscal third quarter ending in February rose 18% to $12.4 billion from $10.5 billion and net income decreased 18% to $1.9 billion from $2.3 billion and diluted earnings per share fell to 68 cents to 84 cents a year ago.
Bond Yields Dropped After Investors Focused on Moderate Wage Gains In Employment Report
Barry Adams
10 Mar, 2023
New York City
After two hours of trading on Wall Street, stocks lacked direction following the mixed nonfarm payroll report for February.
Employers expanded payrolls at a brisk pace and businesses in leisure and hospitality, education and healthcare led the gains.
The latest employment report offered another signal to policymakers as consumers shift spending to services and experiences from goods, driving the demand in travel and hospitality segments.
Service inflation, excluding the housing market, is still running ahead of the overall inflation by a wider margin, making it difficult for policymakers to decide the future rate path.
Crude oil and natural gas prices turned lower in volatile trading and hovered near recent one-year lows.
While stocks lacked direction, bond yields plunged after wage gains moderated, lifting hopes that the inflationary forces may be waning and providing one more reason for policymakers to stick to smaller interest rate hikes of 25 basis points.
Strong Job Gains In February
Total nonfarm payroll employment increased 311,000 in February following the downwardly revised 504,000 in January, the U.S. Bureau of Labor Statistics reported Friday.
Both the unemployment rate, at 3.6%, and the number of unemployed persons, at 5.9 million, edged up in the month.
February payroll gain took the six-month average to 343,000 with notable job gains occurring in leisure and hospitality, retail trade, government, and health care.
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents, or 0.2%, to $33.09 and increased 4.6%.
Stock Indexes Trend Lower
Banks were added to the list of declining sectors including home builders, technology and specialty retailers.
A total of 31 stocks in the widely followed S&P 500 index traded at new 52-week lows.
The S&P 500 index decreased 0.2% to 3,910.95 and the Nasdaq Composite index declined 0.4% to 11,295.66.
Bond Yields Dropped After Wage Gains Moderated In February
The yield on 2-year Treasury notes dropped 26 basis points to 4.64%, 10-year Treasury notes declined 24 basis points to 3.68% and 30-year Treasury bonds fell 18 basis points to 3.69%.
Crude oil price increased 31 cents to $76.03 a barrel and natural gas price fell 5 cents to $2.48 a thermal unit.
Stock Movers
Banks drifted lower after Silicon Valley Bank's parent announced a plan to raise as much as $2 billion.
Regional banks M&T Bank, Fifth & Third Bank, KeyCorp, Comercia and Signature Bank declined between 2% and 5%.
Allbirds Inc plunged 44% to $1.34 after the company said quarterly sales declined for the first time in its history and also announced a restructuring plan including shakeup in executive ranks.
Oracle Corporation declined 2.7% to $84.46 after the database company reported, slightly lower-than-expected, revenue of $12.4 billion in its latest quarter.
Gap Inc declined 3.5% to $11.07 after the specialty apparel retailer reported a fall in quarterly revenue and larger loss.