Frankfort, New York Concerns about US regional banks surprisingly returned on Tuesday. The PacWest and Western Alliance institutes each fell by around 25 percent in New York trading by early afternoon (local time). The papers were repeatedly suspended from trading due to high volatility. The KBW index of regional banks fell 6.1 percent – the most since mid-March, shortly after Silicon Valley Bank (SVB) and New York’s Signature Bank went bust.
The Dow Jones index of standard values was 1.5 percent lower at 33,552 points. The broader S&P 500 fell 1.6 percent to 1,401 points. The index of the technology exchange Nasdaq fell by 1.3 percent and was at 12,059 points.
It’s a mix of factors that alienated investors. After the regional bank First Republic was initially subject to the US deposit insurance FDIC at the weekend and then largely sold to JP Morgan Chase, calm returned on Monday.
But the actions of the regulators triggered new concerns about the banking system. JP Morgan, America’s largest bank, had submitted the best bid for the First Republic, with smaller banks unable to compete. Analysts warn that regional banks will suffer a significant disadvantage as a result. After all, market participants would now assume that deposits at weak regional banks would be taken over by the big banks, triggering a wave of consolidation.
The turmoil in the markets is also increasing pressure on the US Federal Reserve (Fed). Fed Chair Jerome Powell and other policymakers have signaled over the past few weeks that they intend to raise interest rates again at their meeting on Wednesday – to the 5.0 to 5.25 percent range. That increases concerns about a credit crunch and the likelihood of a recession, warns Torsten Slok, chief economist at private equity firm Apollo.
Debt brake dispute unsettles investors
The dispute over raising the debt ceiling in the United States is also making investors nervous. The cost of insurance against a US default continued to rise on Tuesday. US Treasury Secretary Janet Yellen said that by early June the government could likely fail to meet all of its payment obligations.
Wall Street expert Koch: Why the Amazon share remains exciting despite losses
Among the companies, Uber stood out with a price increase of more than eleven percent. Investors liked the prospect of higher-than-expected profits from the ride-hailing service provider. Demand for Uber’s ridesharing and delivery services remained strong, assuaging fears that high inflation and a slowdown in economic growth could hurt spending. Both the number of customers and trips as well as the value of transactions increased in the past quarter.
Look at other individual values:
dupont: The US chemical company is expanding its offering for the healthcare industry with a billion-dollar acquisition. Dupont plans to buy US medical technology company Spectrum Plastics for $1.75 billion. The deal is expected to be finalized by the end of the third quarter.
For this year, Dupont cut its sales and earnings guidance as the electronics and industrial markets recovered more slowly than the company had expected. The stock fell about eight percent.
Chegg: Shares fell 48.6 percent. CEO Dan Rosensweig expects artificial intelligence to “have an impact on our growth rate in new customers”. Chegg issued a weak sales guidance for the second quarter. Otherwise, the online education company beat expectations for the first quarter on both the profit and loss side. Following the results, Jefferies downgraded the stock to hold from buy.
NXP Semiconductors: Shares of the chipmaker rose 3.5 percent after the company beat analysts’ expectations for first-quarter revenue and operating income. The sales forecast for the second quarter was also better than expected.
dell: Morgan Stanley has upgraded the stock to overweight from equal weight. Analysts expect the PC market to bottom out soon. The stock rose 1.6 percent.
Coinbase: Citigroup downgraded the stock over looming regulatory threats. Shares on the cryptocurrency exchange still gained 2.4 percent.
Marriott International: Hotel shares rose more than four percent after Marriott beat first-quarter estimates on both earnings and earnings. According to CEO Anthony Capuano, the lifting of travel restrictions in Asia has boosted growth.
With agency material
More: Cathie Wood is now buying these two biotech stocks