Turmoil in global financial markets eased and leveled off after regulators added a major ring to Credit Suisse Group AG. Still, aftershocks of the turmoil persisted as signs of volatility faded, with overnight gains in US futures fading ahead of the final European Central Bank rate decision. .
European stocks advanced, with Credit Suisse posting its biggest gain in history, sending the bank’s shares up more than 1%. US stock futures rose slightly. Regional banks in the S&P 500 Index are holding on to leveraged earnings, albeit markedly lower on the week. The Cboe Volatility Index advanced to 27.
Treasuries fell in early trading, taking the two-year gain to 4% after hitting record lows in recent days.
- Bonds fell across Europe.
- The dollar index fell a percentage.
- After a sharp selloff, the Swiss franc stabilized.
- The euro recovered from a two-month low.
Banking sector volatility drags S&P 500 lower
Volatility in the banking sector, which began last week with the closure of Silicon Valley Bank and Signature Bank, has completely wiped out the strong performance of the S&P 500 this year. Now experts await the Federal Reserve’s policy meeting, where traders are equally divided on whether the central bank will raise interest rates. Market prices suggest that the Fed will soon reverse course and cut rates by 1% by the end of this year.
Shares of major US banks fell on positive sentiment towards Credit Suisse and the European banking sector.
Citigroup fell 5.5%, while Wells Fargo and Goldman Sachs each lost 3.2%. The loss of the Financial Select Sector SPDR Fund is 2.8%.
Regional banks rallied on Tuesday to outperform the broader market and fell again on Wednesday. The SPDR S&P Regional Bank ETF fell 1.7%, more than 21% and 13% at First Republic Bank and PacWest Bancorp.
The three main indicators were mixed when the market closed.
The Dow Jones and S&P 500 were down 0.9% and 0.8%, respectively. Additionally, the Nasdaq Composite was up just 0.12%.
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