: Bank carnage drags stocks lower as SVB Financial shares plunge

by | Mar 9, 2023 | Stock Market

A brutal day across the banking sector took a toll on the broader market Thursday, with major indexes posting sharp losses after SVB Financial’s sale of a large chunk of its portfolio at a loss sparked selling. SVB
shares fell as much as 62% during the session, leading to a round of selling across the financial sector. The KBW Bank Index
dropped more than 7% for its biggest daily loss since 2020, while major Wall Street banks also felt the heat. Shares of JPMorgan Chase & Co.
fell more than 5% to lead decliners in the Dow Jones Industrial Average

Bank of America Corp.
and Wells Fargo & Co.
shares fell 6.2% each, while Citigroup Inc.
shares shed 4.1%. Alon Rosin, head of equity derivatives at Oppenheimer, said “contagion” in regional bank stocks was “clearly the driver of overall weakness today.” The Dow ended the day down more than 540 points, with a loss of around 1.7%, while the S&P 500
shed 1.8% and the Nasdaq Composite
dropped 2%. On Wednesday, SVB Financial Group sold $21 billion in securities for a loss of $1.8 billion. SVB is the holding company for Silicon Valley Bank of Santa Clara, Calif. It had $212 billion in assets as of Dec. 31. See: SVB Financial’s stock suffers record selloff as rising client cash burn leads to actions to bolster finances In light of the loss on the securities sales, SVB will raise $2.25 billion in new capital through two offerings and a private placement. The prospect of dilution to shareholders’ ownership positions sent shares slumping. Deep Dive: 10 banks that may face trouble in the wake of the SVB Financial Group debacle The selloff in the banking sector not only weighed on stocks, but was also seen sparking a flight to quality that lifted prices of Treasurys, pulling down yields.

The yield on the 10-year Treasury note
fell 5.3 basis points to 3.922%, while the 2-year Treasury note yield
declined 16.4 basis points to 4.90%, its biggest one-day drop since Jan. 6, according to Dow Jones Market Data. —Joseph Adinolfi contributed reporting to this article.

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