(New York) The New York Stock Exchange ended on a mixed note on Monday, overcoming the slippage in the banking sector thanks to giant capitalizations and the good performance of defensive stocks, against the backdrop of a sharp drop in bond yields.
The Dow Jones fell 0.28%, the NASDAQ index gained 0.45% and the broad index S
Wall Street had opened in the red, frightened by the crisis that has hit the American banking sector for several days, to the point of pushing the American authorities to guarantee, in fact, all of the deposits of American customers on Sunday.
But the indices quickly recovered, ending around breakeven, thanks in part to “interest-rate sensitive sectors, which rose on falling bond yields,” Edward Moya said in a note. , from Oanda.
The yield on 2-year government bonds thus contracted by almost 0.6 percentage point, to 3.99% against 4.58% on Friday at the close. Over three days, it has just experienced its biggest drop since the famous Black Monday of October 19, 1987.
Operators have completely revised their projections in terms of monetary policy and now see the Fed curbing and then lowering its rates by the end of the year, while they still counted on Friday on a continuation of forced tightening.
This outlook and the sharp drop in bond yields have benefited some companies in the technology sector, which are highly dependent on borrowing conditions to finance their sustained growth.
Semiconductor manufacturers Broadcom (0.27%) and Texas Instruments (1.31%) took the opportunity to finish in the green.
The New York market has also been able to count on “mega-caps”, giant capitalizations, many of which come from the technology sector. “They have strong balance sheets and pose no immediate risk,” commented Patrick O’Hare of Briefing.com.
Apple (1.33%), Microsoft (2.14%) and Amazon (1.87%), which weigh more than 4000 billion dollars in total, pulled the odds alone.
Another positive note is the support of defensive stocks, i.e. theoretically less sensitive to the economic situation, such as Johnson
The pharmaceutical sector, also considered defensive, was also on a roll, driven by the announcement of the takeover of the biotech Seagen (14.51%), specializing in cancer treatments, by the pharmaceutical giant Pfizer (1.19 %), for $43 billion.
The biotech Amgen (2.33%) was sought, as were the Moderna laboratories (6.95%) or Eli Lilly (3.01%).
While all of these factors helped Wall Street hold up, “concerns remain about regional banks,” said Nick Reece of Guinness Global Investors.
“Some fear further bankruptcies, seeing the value of the shares (of these banks) wiped out and say to themselves that it is not a risk that they want to take,” the manager continued.
On the front line, the Californian establishment First Republic, cut by 61.83% on Monday’s single session.
Despite its status as a regional bank, First Republic is nonetheless the 14th largest financial institution in the United States and weighs more than $212 billion in assets.
She was not the only one in the sights of investors. Other regional brands suffered, including Western Alliance (-47.06%), the Cleveland bank KeyCorp (-24.36%) or the Texas establishment Comerica Bank (-27.67%).
According to Patrick O’Hare, “there is still apprehension that these regional banks could face a meltdown in their deposits as customers have been panicked by what has just happened.”
Most of Monday’s burn victims nevertheless reduced their losses at the end of the session. After rising to its highest level in four months, the VIX index, which measures market volatility, also slowed ahead of the close, a sign of a market coming to its senses.
Concerns about the financial system, fueled by the failure in recent days of two banks in the United States, caused high volatility in stock markets on Monday, while the Toronto Stock Exchange closed lower, pulled higher. down by its finance and energy sectors.
The finance sector plunged on Monday as the shutdowns of Silicon Valley Bank and Signature Bank sparked fears for the wider financial sector, which were felt in the United States and Canada, observed Allan Small, Investment Advisor at iA Private Wealth Management.
The composite index S
Energy stocks fell 4.6% in Canada, which, along with weakness in the financials sector, helped push the TSX down.
Small pointed out that concerns over whether reopening China would lead to higher demand have weighed on oil prices recently.
In the currency market, the Canadian dollar traded at an average price of 72.83 US cents, up from 72.43 US cents on Friday.