Market Extra: SVB collapse means more stock-market volatility: What investors need to know

by | Mar 12, 2023 | Stock Market

It’s all eyes on federal banking regulators as investors sift through the aftermath of last week’s market-rattling collapse of Silicon Valley Bank. The name of the game — and the key to a near-term market bounce — could be a deal that makes depositors at Silicon Valley Bank, or SVB, whole, analysts said. And efforts by regulators appeared to be focused on soothing worries over the ability of companies to access uninsured deposits — most such deposits exceed the FDIC’s $250,000 cap — in order to prevent runs similar to the event that capsized SVB from occurring elsewhere.

“If a deal gets struck tonight that doesn’t haircut depositors, the market is going to rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview Sunday afternoon. Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation. SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp., which was conducting an auction of the bank Sunday afternoon, according to news reports. See: U.S. and U.K. regulators consider …

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