Stocks open lower as further bank-related fears percolate
US stock futures fell at the start of trading on Friday morning as markets ended a bumpy week following the Federal Reserve’s interest rate decision on Wednesday and further pressure in the banking sector.
The S&P 500 (^GSPC) fell around 0.4% at the open, while the Dow Jones Industrial Average (^DJI) lost 160 points, or 0.5%. The tech-heavy Nasdaq Composite (^IXIC) also fell, falling about 0.3%.
WTI crude oil (CL=F) fell around 3% in early trading at $68 a barrel, nearing its lowest level in nearly two years. Brent oil (BZ=F) also fell 2.6% to just under 74 dollars a barrel.
The pressure on oil comes after Energy Minister Jennifer Granholm told lawmakers on Thursday that it may take several years to refill the country̵[ads1]7;s strategic petroleum reserve (SPR), and that it will be “difficult” to take advantage of the current drop in oil prices.
US Treasury yields also fell. The 10-year benchmark interest rate on the treasury fell 10 basis points to close to 3.3%.
On Wednesday, the Fed raised interest rates by 25 basis points, bringing the range for the Fed Funds rate to 4.75%-5%, the highest since October 2007, as well as suggesting that its aggressive rate hike campaign to curb inflation was winding down.
“The Committee expects that some additional tightening may be appropriate to achieve a monetary policy that is sufficiently restrictive to return inflation to 2% over time,” the Fed said in its policy statement, removing the “ongoing” language. interest rate increases” in interest rates.
Stocks ended Thursday’s volatile trading session higher as investors digested the Fed’s latest move.
“Powell stuck to the Fed’s narrative that there is still a path toward a soft landing or return to target inflation without pushing the economy into recession,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note Wednesday. “But that path has narrowed because of the pressure on the banking system.”
Bank sentiment fell early Friday as investor concerns about financial stability continued to rise following the stunning collapse of Silicon Valley Bank, which sent ripples across the financial system.
Regional bank stocks including First Republic Bank ( FRC ), PacWest Bancorp ( PACW ), Western Alliance Bancorporation ( WAL ), and Regions Financial ( RF ) all traded lower to start the trading day.
Major bank stocks also fell with Bank of America ( BAC ), JPMorgan Chase ( JPM ), Wells Fargo ( WFC ), Citigroup ( C ) and Goldman Sachs ( GS ) all falling lower at the market open.
Shares of European bank operators Deutsche Bank ( DB ) and UBS ( UBS ) fell more than 7% and 4%, respectively, as euro banks continue to feel the effects of Credit Suisse’s fall.
According to Reuters, Deutsche Bank’s credit default swaps, a form of insurance against default, jumped to a four-year high, adding to wider stability problems abroad.
Block (SQ) fell another 2% in early trading on Friday, after falling 15% on Thursday, as Wall Street continued to sift through another piece of short seller research from Hindenburg.
Hindenburg Research released allegations of fraud against the company, which was founded and led by billionaire Jack Dorsey. In response, Block said it intended to work with the SEC to “explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today.”
“We had hoped that Block’s response/rebuttal would be more detailed and believe that ‘exploring legal action’ is unlikely to be enough to address investors’ concerns,” Citi analyst Peter Christiansen wrote in reaction to the Hindenburg report, which reflected shareholder sentiment.
Coinbase (COIN) fell another 1.5% after falling 14% on Thursday after the company disclosed it received a Wells Notice from the SEC, which warns companies of pending action from the regulator.
Netflix ( NFLX ), which led the S&P 500 on Thursday with shares rising more than 9%, saw shares settle in early trading on Friday, up about 2%.
Activision Blizzard ( ATVI ) climbed 6.7% at the open, its most since January 2022, after European Union regulators said on Friday they are limiting the scope of their investigation into Microsoft’s planned $75 billion takeover of the video game developer.
Alexandra is a senior reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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