Last Update: May 03, 2023, 02:09 AM IST
US stocks ended the trading day lower on Tuesday, with regional bank stocks recording another day of falling values ahead of an expected rate hike from the Federal Reserve.
The Fed is widely expected to raise its benchmark lending rate for the 10th – and possibly final – time on Wednesday as it looks to tackle high inflation through interest rate hikes.
The Dow Jones Industrial Average closed at 33,684.46, down 1.1 percent.
The broad-based S&P 500 fell 1.2 percent to 4,119.60, while the tech-rich Nasdaq Composite Index fell 1.1 percent to 12,080.51.
Crude oil futures also ended the day down over five per cent on regional banking concerns.
“Fear is a powerful emotion on Wall Street,” Adam Sirhan, chief executive officer of 50 Park Investments, said in an interview.
“When fear takes over, logic goes out the window,” he said.
The broader market reaction to First Republic Bank’s failure on Monday had some analysts predicting the worst may be over for regional banks.
But Tuesday marked another painful day for mid-sized banks, with the KBW Nasdaq Regional Banking Index ending more than 5.5 percent lower.
“Clearly there is concern that this bank situation is not going to get any less after the First Republic, it’s just going to get worse,” LBBW director Karl Helling told AFP.
Among troubled regional banks, PackWest of Los Angeles saw its share price tumble nearly 28 percent, while Phoenix-based Western Alliance plunged more than 15 percent. New York-based Metropolitan Bank also saw its share price fall by more than 20 percent.
But it may not be all doom and gloom for the broader US stock market, said Sirhan from 50 Park Investments.
He added that financial markets often move in the “bigger direction” ahead of an interest rate decision.
“It looks like the market is trying to pressure the Fed to cut rates,” he said.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
