Bank Stocks In Focus After Rate Hike Worries overshadow Market Sentiment

Barry Adams
27 Sep, 2023
New York City

Stocks attempted a rebound and the U.S. Treasury yields edged slightly lower but the U.S. dollar continued to advance amid rising market volatility. 

Benchmark indexes lacked direction in early trading after the yield on the 2-year and 10-year Treasury notes edged lower but hovered at 16-year highs. 

The S&P 500 and the Nasdaq Composite indexes are facing headwinds and the benchmark indexes are set to close down between 3% and 4% for the second month in a row in September.  

Higher rates have begun to impact housing market activities and new home sales fell at the fastest pace in eleven months in August, the Commerce Department report  showed Wednesday. 

Banks are also in focus on the worries that higher-for-longer rates will force several banks, regardless of the size, to raise more capital from investors. 

Rising U.S. Treasury yields are contributing to unrealized losses in the portfolio of government securities held by banks, and interest rates are not near peak rates.   

Moreover, the recent rally in oil prices over the last three months are raising the prospect of a rebound in oil-driven inflation, further putting pressure on policy makers to keep higher rates for longer. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 1.03% to 4,293.08 and the Nasdaq Composite fell 1.1% to 13,126.05. 

The yield on 2-year Treasury notes declined to 5.06%, 10-year Treasury notes inched lower to 4.56% and 30-year Treasury bonds edged down to 4.64%. 

Crude oil increased $1.33 to $91.74 a barrel and natural gas prices rose 2 cents to $2.87 a thermal unit. 

The dollar index edged higher to 106.34, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Target Corp edged slightly higher to $109.55 after the company said it plans to close nine stores in several states after repeated theft incidences, store violence and crime. 

The retail chain said it will shutter stores in New York City, Seattle, Portland and San Francisco-Oakland area. 

Costco Wholesale Corp decreased 1.7% to 543.49 after the membership warehouse retailer reported better-than-expected quarterly results. 

Net sales in  the fourth quarter ending in September increased 9.4% to $77.43 billion from $70.76 billion a year ago. 

Comparable companywide sales, adjusted for gasoline prices and foreign exchange, increased 3.8% from a year ago and U.S. sales rose 3.1% from a year ago. 

Net income in the quarter increased to $2.16 billion from $1.868 billion and diluted earnings per share rose to $4.86 from $4.20 a year earlier. 

Tesla Inc, Lucid Group Inc and Rivian Automotive gained between 0.5% and 1.5% after the United Auto Workers deepened the worker's strike at several plants in the Midwest.