4:16pm: Financial stocks take a hit
The Dow closed Friday down 345 points, 1.1%, to 31, 910, the Nasdaq Composite lost 199 points, 1.8%, to 11,139 and the S&P 500 fell 57 points, 1.5%, to 3,862. The small-cap Russell 200 index declined 58 points, 3.2%, to 1,769.
The benchmarks endured a selloff Friday fueled by the collapse of Silicon Valley Bank, which was taken over by federal regulators and closed until Monday earlier this afternoon.
“You had a major US bank collapse, the biggest bank failure since 2008, inevitably that’s going to spook the market,” said Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, per CNBC.
Other financial institutions struggled as well. Bank of America shares fell nearly 1% and Morgan Stanley (NYSE:MS) stock fell more than 2%.
Mr whether the contagion spreads beyond SVB.
12:05pm: SVB Financial Group stock halted at open after plunging pre market
US stocks were lower in noon trading following stronger-than-expected February jobs data and fears the SVB Financial Group crisis could spread.
At midday, the Dow lost 61 points to 32,194 while the S&P 500 eased 15 point at 3,903 and the tech-heavy Nasdaq slipped 58 points to 11,280.
“Banking system fears are rattling investors right now,” Oanda analyst Ed Moya said.
“It’s becoming pretty clear that the Fed’s rate hiking campaign has definitely taken policy to some very restrictive levels, and now some banks are going to really struggle here,” he added.
SVB Financial Group shares plunged 62% in pre-market trading, before being halted at the open, following media reports that the bank was in talks to sell itself after attempts to raise capital failed.
9:40am: Silicon Valley Bank fallout dents investor confidence
US stocks turned red at the open with investors digesting February’s hotter-than-expected jobs report amid banking sector jitters spurred by the Silicon Valley Bank crisis.
Shortly after the market opened, the Dow Jones Industrial had shed 0.4% or 116 points at 32,138 points, the S&P 500 was down 0.5% or 20 points at 3,899 points, and the Nasdaq Composite had fallen 70 points or 0.6% at 11,267 points.
FOREX.com market analyst Fiona Cincotta noted that this jobs report would likely please the Federal Reserve because it showed that job creation remains strong while, at the same time, average hourly earnings are growing at a slower pace.
“The data comes after the Federal Reserve chair earlier this week sounded a hawkish warning that interest rates may need to rise at a faster pace and stay higher for longer,” she said.
“Expectations of a 50 basis point hike slipped to 54% following the release from around 70% mid-week.”
Cincotta continued: “Gains in stocks could be limited as investors continue to assess the fallout from the SVB share sale yesterday, which sent capitalization worries across the sector.”
After plunging about 60% yesterday on the announcement it had lost almost $2 billion selling assets following a decline in deposits, Silicon Valley Bank’s parent company SVB Financial Group was suspended at the open as the stock continued to fall.
Meanwhile, oil prices are edging lower and are expected to drop 5% across the week, with crude oil down 0.4% to $75.41 at the open.
Cincotta noted this was the steepest weekly decline since early February on fears that steep interest rate hikes in the US could slow economic growth and hit the oil demand outlook hard.
“While optimism surrounding the economic recovery in China had been supporting oil prices, the weaker-than-expected GDP forecast unveiled at the start of the week has knocked this optimism slightly,” she said.
8:35am: Jobs report beats expectations
The US economy added 311,000 jobs in February and the unemployment rate edged up to 3.6%, the US Bureau of Labor Statistics reported today.
February’s non-farm payrolls figure far exceeded the expected 225,000 but came in lower than January’s blowout 517,000 reading. Analysts had been expecting the unemployment rate to remain steady at 3.4%.
Notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing, the Bureau said.
Stocks were already headed for a volatile day after an emergency capital raise by Silicon Valley Bank triggered a sell-off in financial stocks, with the hotter-than-expected jobs report also likely to knock investor confidence.
Shortly after the release of the jobs report, futures for the Dow Jones Industrial Average had fallen 0.3%, the S&P 500 was down 0.2%, and the Nasdaq Composite was flat in pre-market trading.
6:30am: Turmoil in the banking sector
Wall Street is expected to open lower as investors eye the release of February’s jobs report amid turmoil in the market after an emergency capital raise by Silicon Valley Bank triggered a sell-off in financial stocks.
Futures for the Dow Jones Industrial Average fell 1.7% in Friday pre-market trading, while those for the broader S&P 500 index shed 0.4% and contracts for the Nasdaq-100 declined 0.1%.
The S&P financial sector fell about 4% on Thursday, its worst day since June 2020. Shares of Silicon Valley Bank parent SVB Financial Group sank 61% after the firm announced a $1.75 billion stock sale after revealing a day earlier it had lost roughly $1.8 billion following the sale of a portfolio of securities valued at $21 billion, which it offloaded in response to a decline in customer deposits. Two bigger bellwethers, Bank of America and Wells Fargo, saw shares drop more than 6% each. SVB’s shares declined a further 42% in pre-market trading Friday.
The DJIA closed 1.7% lower at 32,256, the Nasdaq Composite dropped 2.1% to 11,338 and the S&P 500 fell 1.8% to 3,918. The small-cap Russell 2000 index lost 2.7% to 1,828.
“Wall Street is reeling amidst heavy selling across US banking stocks, with fears over how robust the sector is in light of rising rates and squeezed consumer confidence taking a toll,” commented James Hughes, chief market analyst at Scope Markets. "The four biggest US-listed banks lost in excess of $50 billion on Thursday and the downside pressures look set to continue building ahead of the open.”
Hughes noted that today’s non-farm payrolls (NFPs) are set to offer little respite for the markets.
The NFPs, due for release by the Labor Department at 8:30am Eastern Time, are expected to show an increase of 225,000 jobs for February after January’s larger-than-expected gain of 517,000.
“If they come in too hot then the Fed will see this as validation of its policy tightening agenda, too low and the damage has already been done – it could yet be a rather disorderly end to the week,” he added. “After yesterday’s jump in unemployment claims, the participation rate will be closely followed in today’s data, as whilst trending upward it remains below pre-pandemic levels and a sluggish print here will do nothing to help bring down that high number of job vacancies, either. Spring may be emerging, but it seems markets may have some storms to navigate yet.”
Initial jobless claims for last week came in at 211,000, a 10-week high. This was an increase from 192,000 in the previous week, and ahead of the consensus expectation of 195,000.