 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, SVB, FRB, PCE |
Let the celebration begin as the banking crisis ends; or is this a harbinger of bad news to come?
Monday S&P 500 0.16% | NASDAQ 0.47%
The week opened to a bit of a yawn. The big news out over the weekend was the purchase of Silicon Valley Bank (SVB) by First Citizens BancShares. This brings stability to the recent banking crisis, but no one knows if it will mean it is actually over.
Tuesday S&P 500 0.16% | NASDAQ 0.45%
Equity markets slipped on the day. The Federal Reserve Board (FRB) was testifying on the collapse of SVB and their role in its oversight. The vivid reminder had markets on edge, leading yields higher, and causing a stronger slip on the tech heavy NASDAQ.
Wednesday S&P 500 1.43% | NASDAQ 1.79%
Markets rallied on Wednesday, with not much substance coming out of the Congressional hearing on SVB. Investors seemed to content to move on from the news. The tech heavy NASDAQ outperformed as a result of the shifting focus.
Thursday S&P 500 0.57% | NASDAQ 0.73%
Initial unemployment claims came out still sub-200K. The strength in the job market continues to signal opportunity for more rate hikes as economic strength remains in place. Equities rose on the day, however, oil struggled.
Friday S&P 500 1.44% | NASDAQ 1.74%
The week/month/quarter ended on a strong note as equities gained across the board. The rally was led by PCE data that showed inflation slowing faster than expected. This index is the FRB’s preferred measure of inflation. The information bodes well for a slower pace of future rate hikes.
Conclusion S&P 500 3.48% | NASDAQ 3.37%
Equities turned in a solid performance for the week, month, and quarter. The move higher did not come easy as doubts still linger regarding stability in the banking sector. The fact that it took two plus weeks to find a buyer for SVB is discouraging. The issue is not so much to do with another bank failure, but with banking institutions confidence in lending. Should lending dry up as a result of the banking crisis, economic activity could dry up as well. Stability in the banking sector will be in focus the next few months, but specifically to meet the need of lending.
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