U.S. stocks rose Monday as volatile trading gripped Wall Street after federal banking regulators took aggressive actions to stem the fallout of Silicon Valley Bank’s failure.
Checking in with the major indexes around 1 p.m. ET, the S&P 500 (^GSPC) added 0.3%, while the Dow Jones Industrial Average (^DJI) increased 0.1%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) rose 0.9%.
Bond yields plunged. The yield on the benchmark 10-year U.S. Treasury note dipped to 3.53% Monday. Traders are also repricing short-end bonds pushing the front end of the yield curve, as two-year yields dropped to 4.1%.
The moves came after stocks got smoked on Friday, rounding out their worst week so far this year. Federal regulators closed tech-focused lender Silicon Valley Bank in the biggest U.S. bank failure since the financial crisis in 2008.
President Joe Biden addressed the nation Monday morning regarding the turmoil in the financial sector. Biden said that “no losses will be borne by the taxpayers” and he assured customers that they would be protected. The president also vowed to ask Congress and regulators to strengthen rules for banks.
His remarks came after regulators took extraordinary action Sunday to stem any fallout. Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and FDIC Chairman Martin J. Gruenberg announced that depositors of the failed Silicon Valley Bank would be able to access all their money starting Monday.
The saga of Silicon Valley Bank has had a rippling effect into a second bank: Signature Bank (SBNY) was closed Sunday, the second bank failure in three days. Among the measures, the Fed said depositors would be made whole. It created a new “Bank Term Funding Program” (BTFP) facility that enables other banks to obtain quick cash in exchange for collateral.
Paul Hickey, co-founder of Bespoke Investments Group, wrote in a note Monday morning that the saga is not necessarily “a repeat of 2008, but these types of comments almost never have their intended purpose of providing comfort to investors.”
Meanwhile, in the UK, British officials worked throughout the weekend to find a buyer for the U.K. subsidiary of Silicon Valley Bank, with HSBC stepping in.
The turmoil on the banking front overshadowed February’s job report, which blew past expectations once again, as the U.S. economy added 311,000 jobs, a slower pace from January’s blowout number, and compared to consensus estimates from economists for job gains of 225,000. The unemployment rate edged up to 3.6%, and wage growth rose 4.6% over the last year, slower than expected.
Economic releases will dominate the conversation this week as Wall Street pays attention to two data prints as the next Federal Reserve’s meeting rapidly approaches. At the same time, investors will be glued to the latest headlines over the collapse of SVB Financial Group and the implications for the banking sector.
Tuesday’s Consumer Price Index (CPI) kicks off the action in data on Tuesday. Economists expect inflation to rise 6% over the last year on a headline basis, while on a “core” basis the call is for 5.5%.
Meanwhile, February’s retail sales read rolls out Wednesday morning. The upshot in the reading of those reports will weigh in on the Fed’s next policy move.
The collapse of SVB has also sparked the debate among traders betting on a forced Fed pause to its cycle of rate hikes. Economists at Goldman Sachs (GS) said it “no longer expects” the Federal Reserve to hike interest rates later this month, while economists at Barclays reconfirmed their stance for a 50-basis-point hike next week.
The sour bank sentiment has spread across markets, as the KBW Bank index (^BKX) fell 8% Monday, while index members including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) all traded down.
Other regional bank stocks including First Republic Bank (FRC) plummeted more than 60% after JP Morgan lent the bank a hand. The California-based bank secured funding from the Wall Street giant that gives it more than $70 billion in unused liquidity.
PacWest Bancorp (PACW), Zions Bancorporation (ZION), First Republic Bank (FRC), Regions Financial (RF), and Western Alliance Bancorporation (WAL) stock has been halted on Monday, triggered by volatility.
In other single-stock moves:
Roku (ROKU): The company said that SVB held 26% of its cash and cash equivalents, per its filing to the Securities and Exchange Commission (SEC).
Credit Suisse (CS): The Swiss lender hit a new record low Monday morning on the fears of the European banks ability hang onto deposits amid the collapse of US lender SVB.
Charles Schwab (SCHW): The stock took a nosedive, marking its biggest daily drop despite defending its portfolio.
Roblox (RBLX): The gaming platform company said in a filing only 5% of its $3 billion cash and securities balance as of February 28, 2023 were held at Silicon Valley Bank. “Thus, regardless of the ultimate outcome and the timing, this situation will have no impact on the day to day operations of the Company.”
Rocket Lab, USA (RKLB): The space company announced on Friday that it had $38 million in cash or 7.9% of its cash as of Dec. 31 with SVB.
Vimeo (VMEO): The video platform company said its account balance was under the $250,000 threshold.
Etsy (ETSY): The online marketplace said in a statement Friday that there would be delay with their deposits in the wake of SVB fallout.
Elsewhere, in the crypto market, Bitcoin (BTC-USD) soared over 16% to over $24,000 in the past 24 hours as the government plans to protect depositors of SVB and Signature Bank.
On the earnings front, FedEx (FDX), Adobe (ADBE), Dollar General (DG), and Lennar (LEN) will report quarterly results this week.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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