- Investors await Friday’s jobs report
- Bank stocks fell after SVB announced stake sale
- General Electric rises after reiterating forecast
- Indexes down: Dow 1.85%, S&P 1.66%, Nasdaq 2.05%
March 9 (Reuters) – Wall Street’s three major stock indexes fell on Thursday, with banking stocks making the biggest drag, while investors worried that Friday’s jobs report could trigger more aggressive interest rate hikes from the Federal Reserve.
The S&P 500’s Bank Index (.SPXBK) ended down 6.6% after hitting its lowest level since mid-October. Investors fled the sector after tech-industry lender SVB Financial Group ( SIVB.O ) launched a share sale to shore up its balance sheet as deposits from startups struggling for funding dwindled.
The Nasdaq fell more than 2%, while the benchmark S&P 500 and Dow lost close to 2%.
Friday’s U.S. nonfarm payrolls report for February fueled inflation concerns with investors expecting higher wages. Federal Reserve Chairman Jerome Powell this week heightened concerns about impending interest rate hikes aimed at combating stubbornly high inflation.
According to CME Group’s FedWatch tool, traders were betting the odds of a 50-basis-point rate hike at the central bank’s March meeting were about 60%, up sharply from a 31% probability before Powell’s Tuesday and Wednesday congressional appearances.
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“There’s a lot of anticipation around tomorrow’s jobs report. We’re going to get a lot of data in the next week and a half,” said Mona Mahajan, senior investment strategist at Edward Jones, New York, citing inflation and retail sales. It suggests that all will be wrapped up before the next Fed meeting, which ends on March 22.
Earlier on Thursday, Labor Department data showed initial claims for state jobless benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4, compared with economic forecasts for 195,000 claims.
While last week’s spike in jobless claims could be “the first sign that the labor market is showing signs of easing,” Mahajan wants to see “more data points to establish a trend.”
The non-farm payrolls report for February is expected to show a 205,000 increase in payrolls after January’s 517,000 figure, which had already led markets to a big U.S. price hike.
Any evidence that last month’s “huge payroll number was not an anomaly” would “serve to reinforce the market’s concerns around the Fed’s response,” said Mark Lushini, chief investment strategist at Johnnie Montgomery Scott in Philadelphia.
February wage growth is expected to rise 4.7% compared to January’s 4.4%, “although we met expectations but it feels like it’s going in the wrong direction,” said Mahajan, who closely follows wage data.
The Dow Jones Industrial Average (.DJI) fell 543.54 points, or 1.66%, to 32,254.86, the S&P 500 (.SPX) lost 73.69 points, or 1.85%, to 3,918.32 and the Nasdaq Composite fell 6 points, or 1.77%, to 3,918.32. 2.05%, 11,338.36.
The biggest drag on the S&P 500 came from financials (.SPSY) and information technology (.SPLRCT).
The financial index fell 4% after June 2020, ending its deepest one-day percentage loss. The S&P Bank Subsector ( .SPXBK ) was last down 4.7% on Thursday. 2023. Thursday Jan. 5 is the first full-day trade below its 200-day moving average.
All of the S&P’s 11 major industrial sectors ended the session lower. Utilities (.SPLRCU), down 0.8%, was the smallest decliner. Consumer Staples (.SPLRCS) was the next smallest, down 0.95%, and Healthcare (.SPXHC) was down 1%.
With investors already worried that the central bank could trigger a recession and trigger a recession and affect bank credit demand, “there is an element of ‘ask questions first to sell’ in relation to contagion risk,” said Lucchini at SVB Financial Janini for banks. Montgomery Scott.
SVB fell 63% at one point to $106.04 and hit its lowest level since August 2016, when the lender cut its 2023 outlook and launched a share sale to trim its balance sheet.
Signature Bank ( SBNY.O ) fell 12% to $90.76 after its crypto-bank peer Silvergate Capital Corp ( SI.N ) revealed plans to voluntarily liquidate. Silvergate closed down 42% at $2.84.
On the bright side, the industrial group closed up more than 5% after General Electric Co ( GE.N ) reiterated its 2023 earnings forecast.
Declining issues outweigh advancing issues at a 5.12-to-1 ratio on the NYSE; On the Nasdaq, a 3.83-to-1 ratio favored decliners.
S&P 500 hits 5 new 52-week highs and 22 new lows; The Nasdaq Composite posted 58 new highs and 289 new lows.
11.69 billion shares changed hands on U.S. exchanges, compared with an average of 10.95 billion over the past 20 sessions.
Reporting by Sinead Carew in New York, Amrutha Khandekar, Sristi Achar A and Johan M Cherian in Bangalore
Our Standards: Thomson Reuters Trust Principles.
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