CNBC Daily Open: The bank rout continues. The Fed might still raise rates anyway

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The slope rout continues.

• Bank stocks had a very, precise unsmooth Monday successful the aftermath of Silicon Valley Bank's implosion, adjacent aft the Federal Reserve offered further backing to banks.

• Investors beware — though fiscal regulators made definite depositors successful SVB and Signature Bank could retreat their money, President Joe Biden didn't person overmuch sympathy for the banks' investors. "Investors successful the slope volition not beryllium protected," Biden said successful a White House speech. "That's however capitalism works."

• Overall, U.S. stocks had a mixed Monday. The Nasdaq Composite was the lone large scale to adjacent higher. European markets were rocked by SVB's collapse. Stoxx 600 fell 2.58%, weighed down by slope stocks, which sank 5.65%.

• The output connected the 2-year Treasury dropped to 4.016%. On Wednesday, it was 5.06%. That's a afloat percent constituent drop, the largest three-day decline since the "Black Monday" of 1987 erstwhile the S&P 500 plunged 20%. Investors are swarming into bonds, pushing yields down, arsenic they question safer assets amid contagion crossed the banking sector.

• PRO Why was SVB the archetypal slope (discounting Silvergate, a crypto-focused bank) to illness from higher involvement rates? This chart shows the bank's unsocial dispersed of assets and however it acceptable itself up to fail.

A associated warrant by the Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corporation wasn't capable to halt the slope rout.

Regional banks were hammered by the second- and third-largest slope collapses successful U.S. history. The biggest losers: First Republic Bank plunged 61.83%, Western Alliance Bancorp plummeted 57.06% and KeyCorp sank 27.33%. Trading was truthful volatile that galore slope stocks had to beryllium halted passim the day. Bigger banks weren't near unscathed. Bank of America tumbled 5.81% and Charles Schwab sank 11.57% adjacent arsenic the Schwab sought to reassure fears, saying it has "access to important liquidity."

The Dow Jones Industrial Average lost 0.28%, its 5th consecutive time successful the red, and the S&P 500 fell 0.15%. But those are insignificant declines compared to the pounding the banking assemblage took, suggesting the broader system is inactive successful bully shape. Indeed, the Nasdaq Composite bucked the inclination to adhd 0.45%. Take the pharmaceutical industry, which roseate connected the quality that Pfizer's acquiring Seagen, a developer of crab therapy, astatine $43 billion. Seagen jumped 15% portion Pfizer gained 1.5%. Pharmaceutical companies not progressive successful the deal, specified arsenic Moderna, Johnson & Johnson and Eli Lilly, besides benefited from this motion of beingness extracurricular the banking sector.

And present for the atrocious news. Despite the turmoil successful the banks, markets and analysts expect the Fed to spell done with complaint hikes. If the Fed pauses, it would "invite markets and the nationalist to presume that the Fed's ostentation warring resoluteness is lone successful spot up to the constituent erstwhile determination is immoderate bumpiness successful fiscal markets oregon the existent economy," explained Citigroup economist Andrew Hollenhorst. (Goldman Sachs' prediction the Fed would enactment its hand, arsenic I mentioned yesterday, is simply a uncommon exception.)

A amended indicator of rates' trajectory would beryllium the user terms scale coming retired aboriginal today. For now, the banking sector's situation seems contained — hopefully.

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