With the second- and third-largest bank collapses in U.S. history, Wall Street is concerned about what may come next, and markets are swinging significantly Monday as investors hurry to find a secure place to put their money.
The S&P 500 remained practically flat in early trade after falling 1.4% at the start. Banks were once again the source of the steepest fall. Investors are concerned that a persistent increase in interest rates intended to curb inflation is nearing a tipping point and may be rupturing the financial system.
After the failures of Silicon Valley Bank and Signature Bank on Friday, the United States government launched a proposal late Sunday to strengthen the banking system.
The smaller banks that are a few steps below the giant “too big to-fail” banks that helped bring the economy down in 2007 and 2008 are under the greatest pressure. Even after the bank announced on Sunday that it had bolstered its finances with funds from the Federal Reserve and JPMorgan Chase, First Republic’s stock dropped 78%.
Large banks, which had been frequently stress-tested by authorities in the aftermath of the 2008 financial crisis, were less affected. JPMorgan Chase declined 0.7%, while Bank of America sank 3.7%.
With the second- and third-largest bank collapses in U.S. history, Wall Street is concerned about what may come next, and markets are swinging significantly Monday as investors hurry to find a secure place to put their money.
The S&P 500 remained practically flat in early trade after falling 1.4% at the start. Banks were once again the source of the steepest fall. Investors are concerned that a persistent increase in interest rates intended to curb inflation is nearing a tipping point and may be rupturing the financial system.
After the failures of Silicon Valley Bank and Signature Bank on Friday, the United States government launched a proposal late Sunday to strengthen the banking system.
The smaller banks that are a few steps below the giant “too big to-fail” banks that helped bring the economy down in 2007 and 2008 are under the greatest pressure. Even after the bank announced on Sunday that it had bolstered its finances with funds from the Federal Reserve and JPMorgan Chase, First Republic’s stock dropped 78%.
Authorities had done a lot of “stress tests” on big banks after the 2008 financial crisis, so they were less affected.JPMorgan Chase declined 0.7%, while Bank of America sank 3.7%.
Before trading in Asia started, the US Treasury Department, Federal Reserve, and Federal Deposit Insurance Corp. declared on Sunday that all Silicon Valley Bank clients would be safeguarded and have access to their cash, as well as efforts to secure the bank’s customers and avoid further bank runs.
After investors withdrew billions of dollars from the bank in a matter of hours, regulators shut down Silicon Valley Bank on Friday, making it the second-largest bank collapse in the United States after Washington Mutual in 2008. They also announced on Sunday the seizure of New York-based Signature Bank, which had become the third-largest bank failure in US history.
