(New York) The New York Stock Exchange closed sharply in the red on Thursday, weighed down by regional banks, after another rate hike by the US central bank, the Fed, on Wednesday, the 10th in a row.
The Dow Jones index dropped 0.86% to 33,127.74 points and the S
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Thus PacWest melted by 50.62%, its title falling to 3.17 dollars.
The Californian bank had indicated overnight that it was examining sales of strategic assets. She assured, however, that she had not recorded “exceptional movements” in her deposits, after the collapse of First Republic Bank, which had to be bought out in disaster last weekend by JPMorgan Chase.
Western Alliance fell 38.52% and Zions Bancorporation 12%.
The big banks also suffered from this turbulence: JPMorgan lost 1.37%, Bank of America -3.09% and Wells Fargo -4.23%.
“We are witnessing a self-fulfilling prophecy,” Tom Cahill of Ventura Wealth Management told AFP, “between short sales that follow negative news, which then drives prices down.” These uncovered sales or short-selling consist of borrowing a security by betting on its decline.
Asked at a press briefing about the possibility of suspending these short sales—as had been done in 2008—a White House spokeswoman indicated that “the government is closely monitoring events in the market, including short selling of bank securities”.
As a culprit, many investors pointed to the rapid rise in the Fed’s key rates, which rose in about a year, from zero to more than 5%. “And the last 25 basis point hike on Wednesday was not a good idea,” said Tom Cahill.
For Scotiabank’s Shaun Osborne, “the Fed’s tighter monetary policy is only driving up funding costs and risks further outflows of capital from regional banks.”
The next step for the market will be, on Friday, the publication of official US employment figures.
A downside surprise in job creation could soothe trade by easing bond yields and implying that the Fed will at least take a break from rate hikes. But nothing is less certain: the market should have created another 180,000 jobs in April against 236,000 in March, according to forecasts.
Listed, Paramount Global plunged 28.35% to $16.40 after announcing a quarterly loss of $1.12 billion, despite an increase in subscribers to its streaming service.
After the close, Apple (-0.99%) climbed 1.21% as the group’s profits exceeded expectations for the second quarter and its sales fell less than expected.
Wall Street has also welcomed a newcomer to the stock market: Kenvue, the consumer hygiene and care products branch (Neutrogena, Aveeno, Band-Aid), of pharmaceutical giant Johnson
This operation is the biggest IPO of the year, having allowed J