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Stock market today: Dow falls as First Republic rout keeps banks on bumpy path

Stock Markets Mar 17, 2023 04:20PM ET
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By Yasin Ebrahim

Investing.com -- The Dow fell Friday, as the bumpy ride for banks resumed, pressured by a rout in First Republic Bank (NYSE:FRC) as concerns about a banking crisis continued despite the $30 billion rescue of the struggling regional bank. 

The Dow Jones Industrial Average fell 1.2%, or 384 points, and the S&P 500 was down 1.1%. The Nasdaq Composite slumped 0.7%, but had its best week of the year, up nearly 6%.

First Republic Bank (NYSE:FRC) fell 33% after suspending its dividend and confirming that it had received $30B in uninsured deposits from major Wall Street banks. While the move helped shore up its liquidity, First Republic, which has fallen by 72% this week, faces higher interest rate payments from recent borrowings that will make it challenging to turn a profit, Wedbush says. 

As well as higher interest rate payments, the hit to its balance sheet from markdowns on its loan and securities means any sale will likely be made well below current valuation. 

A distressed sale of First Republic could result in “minimal, if any, residual value to common equity holders owing to FRC's significant negative tangible book value after taking into account fair value marks on its loans and securities,” Wedbush said as it double downgraded its rating on the stock to Neutral from Outperform, with a $5 price target, down from $140 previously.  

Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo (NYSE:WFC) fell about 4%.

Technology was the relative outperformer falling just 0.2%, underpinned by falling Treasury yields amid ongoing bets that the Fed could deliver its final hike of the year next week, and cut rates in the summer. 

About 70% of traders expect the Fed to hike next week, down from 80% a day earlier.

Tech stocks are also boosted by a rise in Nvidia (NASDAQ:NVDA) after Morgan Stanley lifted its rating on the stock to Overweight from Equalweight and its price target to $304 from $255, citing an artificial intelligence fueled boost to chip demand.

The relative strength of the tech comes as investors appear to be exiting value stocks amid a selloff in banks and energy, which hold large sway in the value sector.

"Investors are buying tech stocks, which would be kind of anti-value," Managing Director of applied research at Qontigo Melissa Brown, told Investing.com's Yasin Ebrahim on Friday. "Many of those stocks, particularly the tech related-names had done really poorly. I think now maybe they look a little bit cheaper to begin with…and if you're not so worried about higher interest rates, then you can justify the move back into those names."

The move into tech, however, isn’t on huge volumes, suggesting that the jury is still out on whether this move has staying power. “But it's not on huge trading volume…it's the marginal player, it's not that everybody's piling into tech," Brown added.

On the earnings front, FedEx Corporation (NYSE:FDX) jumped more than 8% after the logistics company upgraded its annual guidance following fiscal third-quarter results that topped estimates.  

Crypto-related stocks, meanwhile, were in rally mode as Bitcoin surged 7%, helping Riot Platforms (NASDAQ:RIOT), Marathon Digital Holdings Inc (NASDAQ:MARA), and MicroStrategy Incorporated (NASDAQ:MSTR) rack up gains.

Stock market today: Dow falls as First Republic rout keeps banks on bumpy path
 

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Comments (12)
Stan Smith
Stan Smith Mar 17, 2023 6:44PM ET
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Wow!! Look at Gold and Silver...any news on that?
Warm Camp
Warm Camp Mar 17, 2023 6:44PM ET
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US bond rates dropped and yen surged today. Both factors are very positive for gold price.
Chad Richer Than You
Chad Richer Than You Mar 17, 2023 6:39PM ET
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While the USA runs up more debt in Ukraine and its banking system collapses, China is building the world’s largest infrastructure project in history and is seeking peace.
Maximus Maximus
Maximus Maximus Mar 17, 2023 6:39PM ET
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chads daily ad for xi's dystopian chinese dictatorship..
Horde NotTrade
Horde NotTrade Mar 17, 2023 6:39PM ET
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both countries are garbage
JIM VETTER
JIM VETTER Mar 17, 2023 6:21PM ET
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$NVDA is currently running a P/E of nearly 150! The fraud continues
Shawn Schecker
Shawn Schecker Mar 17, 2023 6:21PM ET
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Its not fraud. Supply and demand brother. If the masses pile into a stock, high P/Es get mich higher.
El hadji amadou Ka
El hadji amadou Ka Mar 17, 2023 6:13PM ET
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salut cv
tom kazz
tom kazz Mar 17, 2023 5:46PM ET
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Joe Biden takes bribes from China to destroy America.
Maximus Maximus
Maximus Maximus Mar 17, 2023 5:46PM ET
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rent-free
Maximus Maximus
Maximus Maximus Mar 17, 2023 5:46PM ET
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trump was the president with a chinese bank account, so you got the wrong end of the stick here..
Matt Johnson
Matt Johnson Mar 17, 2023 5:40PM ET
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Investing.com / Reuters is nothing more than propaganda, & a means of manipulating ignorant people into doing what the villains of human society desire of them.
EKL Teo
EKL Teo Mar 17, 2023 5:37PM ET
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Rather than sending $ to prolong war in Ukraine, the region should look at how to save the finance first.
Alan Rice
Alan Rice Mar 17, 2023 5:29PM ET
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Sure. FRC has been missmanaged, but $20 ????? (Riiiiigggghhhhhtttt.)
Mitchel Pioneer
Mitchel Pioneer Mar 17, 2023 5:09PM ET
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Another week of fraud and criminal manipulation in the laughingstock of the investing world.
Jouni Trading
Jouni Mar 17, 2023 5:08PM ET
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Morgan Stanley prob one of the biggest Nvidia some way, so clear agenda to lift the stock valuation, which makes absolutely no sense with the World Record PE, and rising. Or, MS is the biggest lender.
Jason Patcher
Jason Patcher Mar 17, 2023 5:08PM ET
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agree, I got a dow stock with a dividend - not a bank or tech. I'll get my gold minors back if the banking sector ever recovers
 
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