Shares opened lower on Friday as uncertainty in the financial sector kept investors on edge Deutsche Bank (DB(opens in new tab)) The latest lender to hit the “potentially troubled” limelight. That sent its shares tumbling — and kept the broader market lower for most of the day, though major indexes managed to swing higher by the close.
Dow Jones Industrial Average ended 0.4% higher at 32,237 S&P 500 rose 0.6% to 3,970, and Nasdaq Composite rose 0.3% to 11,823. All the three benchmarks closed with gains on a weekly basis as well.
The past few weeks have seen troubling bank headlines. They started with failures Silicon Valley Bank and Signature Bank, and earlier this week, focused on Credit Suisse acquired by UBS Group, Overnight, German lender Deutsche Bank hit headlines as the cost of insuring itself against default rose to its highest level since 2018. reuters (Opens in new tab).
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“Just as hopes grew that the contagion would be contained, banking stocks in Europe rebounded on fears that new problems could be lurking,” says Susannah Streeter, head of money and markets at Hargreaves Lansdowne. Concerns surrounding Deutsche Bank are “growing, even as more deposits are flowing into the German lender as the banking scare hits, and it is believed to have capital reserves that exceed regulatory requirements.”
Still, DB stock was down more than 11% at its intraday low before closing with a more modest 3.1% loss. This created headwinds for other financial stocks including City Group (C (Opens in new tab), -0.8%) and JPMorgan Chase (JPM(opens in new tab), 1.5%).
Creating a sense of unease, Treasury Secretary Janet Yellen today called an unscheduled meeting for the Financial Stability Oversight Council (FSOC) – a group of top financial regulators that works to combat systemic risks in the US economy.
On the economic front, orders for durable goods fell 1% in February. Additionally, preliminary readings of the S&P Global Purchasing Managers’ Index showed factory activity contracted for a fifth straight month in March, while growth in the services sector continued for a second month in a row. “Demand for services will continue to be a headache for policymakers as they work to slow inflation,” says Jeffrey Roach, chief economist at LPL Financial (Opens in new tab). “As the economy releases demand for experiences and bids up prices, persistent services inflation will continue to worry central bankers.”
best defensive stocks
The shaky conditions in the stock market forced investors to look for safe havens today as shown by the strong performance of utility stock And consumer staple stocks, And market participants should prepare for even more volatility.
“The stock market is acting like a teenager right now, susceptible to short-term swings driven by whatever’s in front of it at the moment, whether it’s banking sector uncertainty, Federal Reserve jitters and inflation concerns, says Ryan Belanger, founder. and Managing Principal at Boston-based Wealth Management Firm Claro Consultants (Opens in new tab). “Investors should trust, but verify what they hold in their portfolio and ensure it aligns with their short and long term objectives.”
Investors looking to hedge their portfolios against market volatility may want to look into these best defensive stocksincluding the top-grossing plays, as found in best dividend stocks Or best healthcare stocks,
Source: www.kiplinger.com
