Dow Jones Rises With Gold, Bitcoin Amid Bank Sell-Off; Schwab Rout Stokes Contagion Fears
Dow jumps more than 100 points as investors bet SVB shock will get the Fed to back off hikes: Live updates
The Dow Jones Industrial Average rose in the afternoon session on Monday after early volatility, trying to recover from last week’s steep selloff. Investors remain on high alert and wary of the banking crisis that triggered the SVB collapse. Depositors at the closed bank can now access their money through an FDIC bridge bank created with “normal banking hours and operations, including online banking.”
The collapse of crypto firm Silvergate ( SI ) added to the market woes, while regulators also shut down Signature Bank ( SBNY ), the third-largest US bank, which also had significant exposure to cryptocurrencies. Crypto exchange Coinbase (COIN) said it has $240 million in cash with Signature Bank.
Depositors will get their money back under the “systemic risk exemption” rules that also apply to SBNY.
Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and FDIC Chairman Martin Gruenberg said any loss to the FDIC from supporting depositors who had more than $250,000 would be offset by a “special assessment of the banks as required by law.” Shareholders will not be protected.
The new “Bank Term Funding Program,” which will stem some of the contagion risks, will offer FDIC member banks loans of up to one year backed by U.S. Treasury bonds.
Charles Schwab ( SCHW ) fell nearly 20% to cut losses after Citibank switched from neutral to buy with a 75 price target.
Dow Jones leader JPMorgan Chase ( JPM ) and Bank of America ( BAC ) fell. First Republic Regional Bank (FRC) cut over 60%. The SPDR S&P Regional Banking ETF ( KRE ) fell more than 9%.
Healthcare stocks UnitedHealth Group ( UNH ) and Johnson & Johnson ( JNJ ) outperformed the Dow, along with defensive plays Walmart ( WMT ) and Home Depot ( HD ).
The yield on the benchmark 10-year Treasury note fell 20 basis points to 3.49% as investors sought a safe haven. Gold and Bitcoin rose. The S&P volatility index fell to a 4% gain after rising 16% to a five-month high near the 30th.
Economic data: Analysts
Tuesday and Wednesday inflation numbers are also being watched. Analysts expect inflation to slow to 6.0% from January’s 6.1%. The chance of a 25 basis point hike in March is 47.6%, according to the CME FedWatch Tool. However, analysts at Goldman Sachs ( GS ) believe the Fed will hold off on raising rates at the meeting. The dollar fell on Monday.
The S&P 500 rose at 12 p.m. ET on Monday. Real estate, healthcare and utilities sectors have gained.
Shares of Tesla ( TSLA ) were flat after Wolfe Research analyst Rod Lache downgraded the stock to hold from buy, without changing his 185 price target for the EV stock.
At midday, the Nasdaq rose the most. Shares of Illumina (ILMN) led the way with solid gains. Activist investor Carl Icahn is running for three seats on the company’s board of directors, according to reports from the Wall Street Journal. Moderna ( MRNA ) and Regeneron Pharmaceuticals ( REGN ) were also up this hour.
Volume rose on the Nasdaq and NYSE compared to the same time on Friday.
Oil fell nearly 3% to trade at $74.69 a barrel.
Stocks are moving outside the Dow Jones today
Insulet ( PODD ) rallied as it rose to replace SIVB in the S&P 500. Seagen ( SGEN ) broke out of a mug-and-handle base as Pfizer ( PFE ) announced plans to buy the cancer giant for $43 billion.
Gains continue this week with news from Array Technologies ( ARRY ), Catalyst Pharma ( CPRX ), Five Below ( FIVE ), FedEx ( FDX ), Adobe ( ADBE ), and Dollar General ( DG ). FDX fell while ARRY, FIVE, CPRX and DG rose.
