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Wall Street falls as higher rates pressure market

The S&P 500 fell slightly on Tuesday after rising the previous session, while Treasury rates increased with gold for a second consecutive day, as investors remained leery about banks and the economy in the absence of significant positive triggers.

Markets rose on Monday as investors were glad that no additional bank collapses occurred over the weekend and were comforted by the sale of assets of the failed technology lender Silicon Valley Bank.

With the banking industry in upheaval for weeks after the unexpected bankruptcy of two American banks and the bailout of Credit Suisse in Europe, legislators wanted answers from senior US bank regulators during their testimony before Congress on Tuesday concerning regional lenders Silicon Valley Bank and Signature Bank.

Although consumer confidence in the United States surprisingly climbed in March, people were becoming concerned about the job situation, according to a study issued on Tuesday. Also, the US goods trade imbalance increased slightly in February as exports decreased, possibly weighing on first-quarter economic growth.

But the economic statistics released on Tuesday did nothing to improve market morale, according to Brad McMillan, chief investment officer at Commonwealth Financial Network.

“We’re playing wait-and-see until we get some genuine news we can respond to,” McMillan said, adding that investors were still concerned about banks and the economy in the meanwhile.

“Everyone is expecting a recession, yet the economy is still doing well. When everyone is searching for terrible news, even if the bad news isn’t there, it’s difficult for the market to rebound.”

The Dow Jones Industrial Average increased by 57.09 points, or 0.18 percent, to 32,489.17; the S&P 500 decreased by 5.89 points, or 0.15 percent, to 3,971.64; and the Nasdaq Composite decreased by 71.98 points, or 0.61 percent, to 11,696.86.

The pan-European STOXX 600 index fell 0.03 percent, while the MSCI world market index rose 0.20 percent.

Stocks in emerging markets gained 0.77 percent. MSCI’s broadest index of Asia-Pacific equities outside Japan finished 0.81 percent higher, while the Nikkei in Japan gained 0.15 percent.

Also Read: S&P 500 closes marginally higher; SVB transaction boosts bank shares
Benchmark 10-year US Treasury rates rose on Tuesday as investors expressed cautious confidence that the financial system’s stress could be controlled as they awaited the sale of five-year notes.

Benchmark 10-year notes rose 2.1 basis points to 3.54 percent, up from 3.52 percent on Monday. The 30-year bond was recently up 0.3 basis points to yield 3.76 percent. The 2-year note yield was recently up 6.4 basis points to 4.02 percent.

The US dollar was sliding against a basket of currencies for the second day in a row, as easing concerns over the banking system rekindled investors’ enthusiasm for riskier currencies.

The dollar index declined 0.28 percent, while the euro rose 0.4 percent to $1.0839. The Japanese yen gained 0.47 percent against the US dollar, closing at 130.91 per dollar, while sterling was last trading at $1.2342, up 0.47 percent for the day.

At 18.25, the Mexican peso was up 0.56 percent against the US dollar. The Canadian currency increased 0.29 percent against the US dollar to 1.36 per dollar.

Federal Reserve Governor Philip Jefferson said on Monday that stress among small banks might have the greatest impact on small firms.
Nonetheless, Goldman Sachs analysts believe that tighter lending conditions as a result of the Fed’s attempts to control inflation would be a drag on the economy but would not derail it.

“We do not anticipate this to be a storm that sends the economy into recession and prompts aggressive Fed easing,” they said in a letter on Tuesday.

Oil prices went up on Tuesday, after going up a lot the day before because of worries about supply problems in Iraqi Kurdistan.Oil prices increased more than $3 on Monday due to supply worries after the suspension of exports from Iraq’s Kurdistan region.
US crude recently jumped 1.02 percent to $73.55 per barrel, while Brent was at $78.92, up 1.02 percent on the day.

Gold prices increased after two days of falls, aided by a lower US dollar, even as bond rates rose and bank sector jitters began to subside.

Spot gold rose 0.6 percent to $1,967.73 per ounce.

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