Wall Street Breakfast: What Moved Markets
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Stocks ended their worst week so far this year with a fourth straight day of losses, and U.S. Treasuries and gold soared in a flight to quality, after federal regulators closed tech-focused lender Silicon Valley Bank on Friday in the biggest U.S. bank failure since 2008. Regional bank stocks plunged, with the top S&P regional banking ETF sinking 16% on the week, its worst showing since March 2020 at the start of the pandemic. The turmoil in bank stocks overshadowed the February jobs report, which offered some hints that inflation may be easing, as employee wages increased less than expected. For the week, the Dow Jones average fell 4.4%, the S&P 500 slipped 4.5%, and the Nasdaq Composite lost 4.7%.
China's National People's Congress convened its annual parliamentary gathering this week, setting a GDP growth goal of "around 5%" for 2023 to mark its lowest target in over three decades. Perhaps unsurprisingly, China's defense spending will rise by 7.2% - or by nearly $230B - which is greater than its economic growth objective, and ahead of its 5.7% increase in general public expenditure. The figures will be on the radar of lawmakers on Capitol Hill, with U.S. defense spending in focus amid budget cut talks on the debt ceiling. Tensions also continued to escalate between the world's largest economies over silicon and technologies of the future as a war of words ratcheted up on both sides. (32 comments)
Fed Chair Jerome Powell was in the hot seat on Tuesday and Wednesday, delivering two days of semi-annual monetary policy testimony on Capitol Hill. Markets were jolted by comments that suggested the central bank could put an end to its recent shift towards more gradual tightening, with the "ultimate level of interest rates likely to be higher than previously anticipated." The speech showed just how dependent the Fed will be on incoming data ahead of its upcoming policy meeting scheduled for March 21-22. Over the next two weeks, investors will be able to size up their positions on how hard the central bank will go, with a flurry of releases scheduled on the economic calendar. (126 comments)
DeSantis and Disney (DIS) are not the only game in town anymore. California Gov. Gavin Newsom made good on his threat of "not doing business with @walgreens," pulling a $54M contract for specialty prescription drugs that was set to renew on May 1. "We're serious about not investing in companies that cave to the extremist agenda of the @GOP," Newsom tweeted, after Walgreens (WBA) said it would refrain from selling abortion pill mifepristone in 20 states due to potential legal consequences. Will the politics spill over into a corporate exodus, as activism takes hold in the Sunshine and Golden States? (156 comments)
The investing world is still trying to determine whether there is another banking crisis on the horizon following the collapse of Silvergate Capital (SI) and the shoring up of Silicon Valley Bank. Shares of the latter's parent company, SVB Financial (SIVB), tumbled 60% on Thursday and fell another 20% in the AH session to $82.90. Panic quickly spread to the broader market as bank shares across Wall Street reacted to the developments, and pushed the S&P 500 Financials Index Sector (SP500-40) down 4% by the close, marking its worst drop since June 2020. At the time of writing, reports suggested that SIVB's attempt to raise capital failed and it was in talks about a sale, but check out the latest headlines and updates here. (57 comments)
Senate Intelligence Committee Chairman Mark Warner (D-VA) introduced bipartisan legislation aimed at policing the threat of technology from "adversarial" nations, a move lately pointed at a potential ban of Chinese-based hit TikTok (BDNCE). The "RESTRICT Act" would allow the U.S. Commerce Secretary to determine if a transaction poses "undue or unacceptable risk" to national security, and could be sent to the president for action, including forced divestment. "It's safe to assume that if the CCP is willing to lie about its spy balloon and cover up the origins of the worst pandemic in 100 years, they'll lie about using TikTok to spy on American citizens," declared Republican Sen. John Thune, who co-sponsored the bill as support builds on both sides of the aisle. Any ban on TikTok would affect social media players like Snapchat Spotlight (SNAP), Instagram Reels (META) and YouTube Shorts (GOOG, GOOGL). (52 comments)
U.S. Indices
Dow -4.4% to 31,910. S&P 500 -4.6% to 3,862. Nasdaq -4.7% to 11,139. Russell 2000 -8.1% to 1,773. CBOE Volatility Index +34.1% to 24.8.
S&P 500 Sectors
Consumer Staples -1.9%. Utilities -2.9%. Financials -8.5%. Telecom -4.1%. Healthcare -4%. Industrials -4.5%. Information Technology -3.1%. Materials -7.6%. Energy -5.4%. Consumer Discretionary -5.6%. Real Estate -7%.
World Indices
London -2.5% to 7,748. France -1.7% to 7,221. Germany -1% to 15,428. Japan +0.8% to 28,144. China -3.% to 3,230. Hong Kong -6.1% to 19,320. India -1.1% to 59,135.
Commodities and Bonds
Crude Oil WTI -3.8% to $76.68/bbl. Gold +1% to $1,872.7/oz. Natural Gas -19% to 2.436. Ten-Year Bond Yield -0.2 bps to 3.704.
Forex and Cryptos
EUR/USD +0.11%. USD/JPY -0.64%. GBP/USD -0.06%. Bitcoin -8.7%. Litecoin -19.9%. Ethereum -7.%. XRP -1.8%.
Top S&P 500 Gainers
General Electric (GE) +5%. Arista Networks (ANET) +4%. Intel (INTC) +3%. Chipotle Mexican Grill (CMG) +3%. The Kroger (KR) +2%.
Top S&P 500 Losers
SVB Financial (SIVB) -80%. Signature Bank (SBNY) -38%. First Republic Bank (FRC) -34%. The Charles Schwab (SCHW) -24%. Lincoln National (LNC) -18%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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