THE GIST (“THE WHAT”)
Regional banks were slammed as fears of banking crisis remained front and center in today’s risk off session. Energy stocks further fueled the losses alongside falling crude oil prices on growing recessionary fears. The S&P 500 index fell during the early part of the session to hit the day’s low at 4089.72 but managed to stabilize losses for most part of the remaining session to settle off the day’s lows at 4119.58, down 48.29 points (-1.16%).
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THE DETAILS (The “How & Why”):
Alongside investors’ nervousness ahead of the Fed’s policy decision tomorrow, regional bank stocks plunged amid worries that the tightening lending standards could hurt regional banks’ profitability and could eventually slow down the economy. PacWest Bancorp (-27.78%), Western Alliance Bancorp ( -30.93%), and Zions Bancorporation NA (-10.81%) were slammed along with other big banks.
Oil prices fell to a five-week low, dragging big energy stocks lower on growing recessionary concerns. Energy stocks further fueled the day’s losses with BP plc (-8.07%), Exxon Mobil Corp (-3.99%) and Chevron Corporation (-4.31%) among the biggest decliners within the sector.
In economic data, the March Jolts data came in at its lowest level since April 2021, sending yields lower. Job Openings and Labor Turnover Survey for the month of March also showed signs of a loosening job market. While markets broadly are expecting a 25-basis point hike tomorrow, investors will be closely watching for any signs that the Fed will hit a pause or continue to tighten its monetary policy in its attempt to fight the sticky inflation.