U.S. Investors Turn Cautious On Growing Recession Risks Driven By Regional Bank Capital Shortfall Worries

Barry Adams
28 Mar, 2023
New York City

Stocks on Wall Street traded down in early trading as investors reassessed the health of the U.S. banking system and the prospects of economic recession. 

Investors turned cautious, despite the reassurances from regulators and officials, on the worries of wider contagion in the regional banking system. 

U.S. officials have been offering soothing words but banks are set to declare larger losses in treasury securities assets, which are generally deemed safest investments. 

Moreover, higher-rates-for-longer are going to expand losses in Treasury securities, forcing many banks to raise capital or seek government support.     

Rising losses in regional banks and the near-impossible task of raising new equity capital in the current market conditions are also fueling worries that private sector lending will slow down as banks focus on rebuilding their balance sheets. 

 

International Goods Trade Deficit Held In February 

The international goods trade deficit in February edged up to $91.6 billion from $91.1 billion in January, the U.S. Census Bureau reported Tuesday. 

Exports in February declined to $167.8 billion from $174.6 billion in January but rose from $159.1 billion a year ago. 

imports in February decreased to $259.5 billion from $265.6 billion in January and fell from $264.4 billion a year ago. 

 

Price Unadjusted Wholesale and Retail inventories Advanced in February 

Wholesale inventories, seasonally adjusted but price unadjusted, in February increased 0.2% from January to $920.3 billion, and increased 12.2% from a year ago. 

Retail inventories, seasonally adjusted but not adjusted for prices, in February increased 0.8% from January to $747.3 billion, and up 10.8% from a year ago. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 1.38 points to 3,976.15 and the Nasdaq Composite index fell 60.44 points or 0.5% to 11,708.40. 

The yield on 2-year Treasury notes rose to 4.02%, 10-year Treasury notes increased 3.54% and 30-year Treasury bonds advanced to 3.78%.

Crude oil traded unchanged at $72.78 a barrel and natural gas edged down 3 cents to $2.05 a thermal unit. 

 

U.S. Stock Movers 

Alibaba Group Holding Ltd jumped  8.02% to $93.03 after the Chinese e-commerce giant said it plans to split the company into six separate units including e-commerce, media and cloud services. 

Lyft Inc increased 6.0% to $10.19 after the ridesharing company said its co-founders, chief executive Logan Green and President John Zimmer, plan to step down from management roles and transition to non-executive roles.  

Former Amazon executive David Risher will become chief executive officer on April 17. 

Occidental Petroleum jumped 2.1% to $60.89 and a regulatory filing showed Berkshire Hathaway acquired additional 3.7 million shares for $216 million, increasing the Warren Buffett controlled conglomerate's stake to 23.5%.