The turmoil in global financial markets is ebbing away. Today the benchmark stock indices are trading quietly. Investors are mulling over risks and revising their sentiment.

Fresh macroeconomic data released today complemented the fundamental picture but the market gave a muted response on the statistics. No wonder, investors’ nerves are still jangling and the quiet market could end up in a roller coaster.

Following a slump in the early North American session yesterday, Wall Street indices recouped losses in the late trade. The Nasdaq was the only index to close with gains.
The Dow Jones came under the strongest pressure. It tumbled by almost 280 points and closed 0.87% down. The Nasdaq inched up by 5 points 0.05%. The S&P 500 logged an intraday loss of 0.7% to close at 3,891.
The benchmark indices opened cautiously on Thursday. Futures on the stock indices traded mixed. A weekly update on US unemployment claims pushed the indices down. The S&P 500 is expected to trade in the intraday corridor between 3,820 and 3,940.
Credit Suisse is to blame for pessimism on Wall Street yesterday. The bank’s shares crashed in the early New York trade due to fears about its future. Later on, the indices regained their footing as the Swiss government was engaged in the talks on the options of stabilizing the giant bank.
Still, the jitters with Credit Suisse escalated pressure on the banking sector after the US authorities took emergency measures for investors to stem the crisis after the collapse of SVB and Signature bank.
Some investors reckon that the Fed’s aggressive monetary tightening entailed cracks in the financial system.
The Federal Reserve conducted the cycle of dramatic rate hikes, unseen since 1980. Analysts suppose that the time is ripe to slow down.
The Commerce Department reported yesterday that US retail sales dropped by 0.4% in February at the same degree as producer prices. This encourages investors who cling to hopes that the US Fed could ease the pace of rate hikes.
Yields of US Treasuries went down. Now traders expect a fifty-fifty chance of a rate hike by 25 basis points at the March meeting or a pause in the cycle of monetary tightening.
First Republic Bank shares plummeted by 21.37%. West Bancorp shares fell by 12.87%. Western Alliance and the Charles Schwab broker changed the trend as their shares rose by 8.3% and 5% respectively.
Top American banks, including JPMorgan, Citigroup, and Bank of America slumped. That pushed the banking sector in the S&P 500 down by 3.62%. Most of the 11 sectors in the S&P 500 incurred losses. The energy sector logged the weakest results with a decline by 5.42%.
Futures on Wall Street indices traded mixed in the pre-market. The Swiss National Bank threw a lifebuoy to the ailing Credit Suisse.
Credit Suisse shares listed on US exchanges climbed by 8.8% in the pre-market after the bank was provided a bailout worth 54 billion dollars by the Swiss National Bank to sustain liquidity and investors’ trust.
Still, the market gave a lukewarm response. The banking sector is still affected by jitters. Policymakers and monetary authorities in Europe and Asia assured the public and markets that banks in their jurisdictions are safe and well supported. The market seemed to believe.
Last week, yields of two-year US Treasuries gyrated. On Thursday, yields hovered at around 4%, more than half a percentage point lower than last week. Nevertheless, extreme volatility of safe haven assets arouses worries.
Today the US authorities tried to calm down the panic. Treasury Secretary Janet Yellen affirmed that the US banking system is healthy. Americans may be sure that their deposits could be withdrawn if necessary, she claimed.
She also stated that the US government adopted measures to reinforce investors’ trust and protect their savings despite the crash of Silicon Valley Bank.
Apart from banks, Adobe shares rose by 5.8% in the pre-market, thus propping up the Nasdaq. The software developer upgraded its profit target for 2023.

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