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U.S. stocks are falling as bank worries cloud over Fed optimism

AuthorLiz Moyer
Published 05/04/2023, 09:44 AM
Updated 05/04/2023, 11:49 AM
© Reuters.

Investing.com -- U.S. stocks were falling amid revived concerns about the U.S. banking system.

At 11:47 ET (15:47 GMT), the Dow Jones Industrial Average was down 393 points or 1.2%, while the S&P 500 is down 0.8% and the NASDAQ Composite is down 0.4%.

Concern about the health of the banking system is weighing on optimism that the Federal Reserve is nearing the end of its interest rate hikes as economic data shows its actions to now have started to cool inflationary pressures.

Shares of PacWest Bancorp (NASDAQ:PACW) fell 49% on Thursday and halted trading after the Los Angeles-area lender said it was exploring strategic options, including a sale. This comes just days after regulators seized First Republic Bank and JPMorgan (NYSE:JPM) agreed to buy its deposits and most of its assets.

Other regional bank stocks are feeling the pressure as KeyCorp (NYSE:KEY) shares fell 5.9%, while Zions Bancorporation (NASDAQ:ZION) fell 9.6%.

The Fed raised interest rates again on Wednesday, by a quarter of a percentage point, to the highest they have been since 2007. Chair Jerome Powell suggested the Fed could be nearing the end of the rate hiking cycle, though the ultimate decision would come down to the data.

Futures traders are anticipating that pause to come in June.

New jobless claims rose last week to 242,000, slightly more than expected. The bigger snapshot of the state of the labor market in the U.S. is coming out tomorrow in the form of the jobs report for April.

Apple Inc. (NASDAQ:AAPL) shares fell 0.9% ahead of its quarterly earnings report after the closing bell tonight. Shares of Qualcomm Incorporated (NASDAQ:QCOM) fell 5.7% after weaker than expected guidance.

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Latest comments

narrative doesn't make sense. if things are really bad, fed can do something else... then why is fed optimistic?
They lost the plot- college kid trying to make 5.99 per article.
The Fed is not going to reverse course. Most likely rates will continue to rise until mortgage rates are at least comfortably steady at 7% to  8% . Healthy banks and investors need to learn to function in this higher rate environment. Deposits need to be rewarded with higher interest rates on savings, lending should be strict, 0% rates should be rare. Times have changed. If not, this last 12 months of severe, shocking, relentless tightening was all for nothing.
buy buy. dow will go up 1000 points. fed just lying all well but 50% US deposit with small banks and small banks facing crises. it's really dangerous
You would think since Trump and Biden doubled the nation’s money supply banks would be swimming in cash lol
we were swimming in vaccines, covid tests, test kits and hospital bribes
Wrong. Trump increased the money supply by about 45%, Biden by about 5%, to date. You don't know what you are talking about.
Gee Brad, how much has the national debt gone up under Biden?
Only 186 banks are now in distress..It could be worse right? I'm sure this will be green by end of day...somehow..Lets be optimistic ...lol
green untill all of the banks fail
alliance bank on the way and do not know how many more on the way and if US govt default on 1st june then big global crises
patience and buy after only us default news get clear
fed may have to cut 100 bps in june.
June 2024
Lol June as in 30 days from now
🤮
🤣
I'm leveraged 20X is that too much?
after apple disappoints, we should drop another 2%
sent from iPhone 14
apple rarely ever miss earning. look at the stock move in the last couple of weeks, it will be a big jump for the market when apple release earning
@Mark: Living up to your reputation, we see.
everything will be fine. contagion is sttupid in a way. big banks have proved their systems are fine through earnings. selloff in big banks are to protect profits and they know too well that these stocks will go back up soon. nothing breaks your acct but fakenews and bad rumors.
this is just the fuse for the bad economy. market should not be this high with inflation still a problem and growth slowing
majority of earnings have been positive or very positive, so why concern of a bad economy? this is why that market has been up. stocks will get higher after each bump no mater what people say
Mark well said ,Thats how market works …
LOooooooool. i heared Jerome yesterday. he didn't say any of that. oooof bagholders coming soon.
It's all part of the Plandemia
Joe Biden
small bank in danger. and if govt fail to pay by 1st june then global crises. so buy but careful. or enjoy 15 , 20 days vacation and wait and watch whether default or US govt making payment before 1st june
All the banks are insolvent- just go and try to get your money out- you can not even get 6k cash out. The Fed created this problem years ago with zero interest rates for way too long. You have faith that they will fix it? Lol Remember Powell Biden Yellen and their talking head cronies all told you inflation was temporary. That was your clue to buy gold . It was 1650 It was your clue to short the DX. It was your clue to short the banks. They will lie straight to your face-
You can't get 6k out because they won't let you withdraw more than you have.
the level of fearmongering in here is getting beyond ridiculous..
Banks are dropping like flies...just ignore this?
You are the only ridiculous here thinking day after day everything is just fine in economy
Thank you
This is spreading to larger banks now. US Bancorp is now tumbling. Into Gold boys before its too late!
withdraw your money from banks while it is time.
Fed won't solve bank crisis because it is related to "TRUST" and you can already see american citizens move their money from bank to bank seeking stability amid chaos.
FED optimism has only made this worse. Remember the 'inflation is transitory' optimism?. Perhaps the markets are inflated !!
What FED optimism? JP never said PAUSE or PIVOT.
Stop inflation by stopping price speculation.
Short every US bank, then your bank Will atleast be good 🤣🤣
omg i am so afraid 🙄
I think market crash is soon
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