A tumultuous week in the U.S. financial markets ended on an uncertain note Friday after a massive $30 billion injection of big-bank deposits into First Republic Bank failed to calm investors.
Last week, the sudden meltdown of three U.S. banks – Silvergate Capital, Signature Bank
and Silicon Valley Bank – began to rekindle concerns about weakness in the banking sector amid sharply higher interest rates.
SVB Financial Group
on Friday filed for Chapter 11 bankruptcy and said it will seek a court-supervised reorganization. Silicon Valley Bank was put into Federal receivership following a run on its deposits.
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In a matter of days, other regional banks and financial firms have been swept up in the selloff.
First Republic Bank
another California midsize bank, saw its stock price hit an intraday record low this week, before the bank was promised a $30 billion pledge of deposits from a group of the country’s largest banks including JPMorgan Chase
Bank of America
In Europe, shares of Swiss banking giant Credit Suisse
slumped to about $2 a share in New York trading. The bank said on Thursday it intended to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank to boost its liquidity. The bank’s shares in New York were down 33.9% on the year through Friday.
Here’s a look at big swings across financial markets in roughly the past week.
Shares of the SPDR S&P Regional Banking ETF
which covers the regional banks segment of the broader S&P 500 index, slumped 24.5% in the past seven trading days since March 9, a day after SVB announced it sold a portfolio of securities at a more than $1 billion loss. Depositors began to flee, and the bank was closed by regulators on March 10.
The Treasury, FDIC and Federal Reserve on Sunday announced guarantees for all deposits at Silicon Valley Bank and Signature Bank to shore up confidence in the banking sector.
Shares of the SPDR S&P Regional Banking ETF slumped 6% on Friday. Shares of First Republic Bank declined 32.8%, after the $30 billion deposit influx failed to calm jittery investors.
A selloff in bank stocks pulled down the broader stock market, leaving the S&P 500 Index
with a 2.1% decline since March 9, and briefly wiping out the large-cap benchmark’s early 2023 gains.
The S&P 500 finished 1.1% lower on Friday, but gained 1.4% for the week, according to Dow Jones Market Data. It was up 2% for the year as of Friday.
The Nasdaq Composite Index
outperformed the Dow Jones Industrial Average by 4.45 percentage points this week, its largest weekly outperformance since March 20, 2020, according to Dow Jones Market Data.
The jump in the biggest technology and semiconductor names helped constrain losses on the Nasdaq 100 index, which tracks the top 100 technology companies on the Nasdaq Stock Exchange.
The Nasdaq Composite Index
ended lower on Friday, but booked a weekly gain of 4.4%, while the Dow Jones Industrial Average
was down 0.2% for the week.
See: Microsoft, Apple and Meta outperform as investors seek safety in megacap tech stocks
The bond market also had a week of extremes. The yield on the 2-year Treasury note
dropped 74 basis points, the biggest weekly decline since October 1987, a period marked by the Black Monday stock-market crash, according to Dow Jones Market Data.
See: Why bond-market volatility is at its highest since the 2008 financial crisis amid rolling fallout from banks
Adding to its swings, February’s CPI report showed little progress on cooling off high inflation, which failed to subside ahead of the weekend. The policy-sensitive 2-year Treasury yield fell 28.4 basis points to 3.846% on Friday. That was the lowest level since Sept. 14, 2022.
Trading in the fed-futures market also has been choppy, with odds on Friday showing a 40% chance of no Fed rate hike in its meeting next week and a 60% probability that policy makers will raise rates by another 25 basis points to a range of 4.75%-5%, according to CME FedWatch tool.
Gold prices surged 8.1% in the past seven trading days, finishing at their highest levels in 11 months on Friday and booking their best weekly gain in nearly three years, according to Dow Jones Market Data. Fears of potential further stress in the banking sector weighed on investors’ sentiment, bolstering the safe-haven appeal of the yellow metal.
Gold futures for April delivery
gained $50.50, or 2.6%, to settle at $1,973.50 per ounce on Comex on Friday, with the most-active contract rallying 5.7% for the week. That was the highest settlement for the yellow metal since April 18, 2022 and its biggest weekly advance since April 2020, according to Dow Jones Market Data.
The ICE U.S. Dollar Index
a gauge of the greenback’s strength against a basket of rivals, dropped by 1.5% since last Thursday. The dollar also closely tracks moves in the 2-year yield.
The dollar index bounced on Wednesday morning as Credit Suisse liquidity concerns revived concerns about risks in the global banking system, sparking safe-haven buying of the dollar.
Oil futures tumbled with the most-active U.S. contract finishing at the lowest level in 15 months and booking its biggest weekly drop in nine months, according to Dow Jones Market Data.
The U.S. benchmark West Texas Intermediate crude for April delivery
fell $1.61, or 2.4%, to settle at $66.74 a barrel on the New York Mercantile Exchange, leaving the contract with a weekly loss of 13%, according to Dow Jones Market Data.
The contract declined by 14.2% in the past seven trading sessions, according to Dow Jones Market Data.
The price of Bitcoin took a hit last Wednesday when Silvergate Capital Corp .
said its crypto-friendly Silvergate Bank would be winding down operations and liquidating, with a goal of returning all deposits.
However, following the failures of SVB and Signature Bank, bitcoin rallied over 20% in the past nine sessions, to trade at $26,750.50 on Friday, according to CoinDesk data.
Bitcoin has long been viewed with skepticism by the financial establishment, but its supporters have argued it represents an alternative to the traditional banking system.
See: What happened to Silvergate Capital? And why does it matter?