Markets “In a Nutshell” for March 13, 2023
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 4.40%, the S&P 500 was down 4.5%, and the NASDAQ fell 4.70%. Foreign stocks (MSCI EAFE) were also down, falling 0.4%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.70%. (Data source: Wall Street Journal)
Silicon Valley Bank Collapse
Last Friday Silicon Valley Bank (SVB) was shut down by government regulators. This is the biggest U.S. bank to fail since the global financial crisis in 2008. SVB was the 16th largest bank in the US and many of its customers are startup companies. The government will back the customers of the bank and have indicated they will have access to their money today. This is still a developing story and will have an impact on financial markets as many regional banks have seen their stocks fall as worries of this happening to them exist.
Fed and Rates
Last week Fed Chair Jerome Powell came out and reiterated the need to raise rates as they continue to battle inflation. The market took a dip in Powell’s speech, but this took place before the SVB collapse. After the SVB collapse, yields plummeted as fears grow of an economic slowdown and how the banking system will react. Just Sunday regulators shut down another bank, Signature Bank which is a crypto-based bank. In just a few days since Powell’s speech yields have gone from over 4% on the 10-year to under 3.5% on Monday morning. With the Fed set to meet next week, the market will pay close attention as some now believe that the Fed could pause rate hikes as they worry about more banks collapsing. The Fed will have a lot to debate in the coming weeks as the market has now given up almost all of its gains for 2023 and worry about the banking system and possible collateral effects are high.
What is the current unemployment rate? (Scroll Down for Answer)
Have a Great Week!
2) 3.6%. As SVB took headlines this past week, the new jobs number was 311,000 for February, beating expectations, but unemployment rose to 3.6% and is still near all time low levels as the job market remains tight.