U.S. stocks traded lower again on Thursday, with the market headed for its biggest weekly selloff since March, after the Federal Reserve raised interest rates Wednesday while regional bank stocks came under pressure again.
How are stocks trading
- The S&P 500 SPX,
-0.78%fell by 38 points, or 0.9%, to 4,053.
- The Dow Jones Industrial Average DJIA,
-1.17%declined by 360 points, or 1.1%, to 33,053.
- The Nasdaq Composite COMP,
-0.39%fell by 92 points, or 0.8%, to 11,933.
On Wednesday, the Dow Jones Industrial Average fell 270 points, or 0.8%. The blue-chip gauge is on track to fall 2.6% this week.
What’s driving markets
U.S. stocks fell again with financials leading the way down after the Federal Reserve raised interest rates on Wednesday for the tenth time though Chairman Jerome Powell hinted at a pause in rate hikes.
U.S. stocks are headed for their worst week since March 10, the day Silicon Valley Bank collapsed, as investors fear the Federal Reserve might be powerless to ease pressure on the banking sector by cutting rates, said Michael Lebowitz, portfolio manager at RIA Advisors.
“The Fed is stuck, if this would have happened prior to Covid and inflation wasn’t an issue, the Fed would be talking about cutting rates or slowing down on QT or stopping it. But right now, they have an inflation problem to deal with,” Lebowitz said.
The financial services sector was the worst performing in the S&P 500 index Thursday.
Just hours after Fed Chair Jay Powell said that the banking sector was “sound and resilient” during Wednesday’s press conference, shares in PacWest Bancorp PACW,
“It looks like more trouble is brewing for the U.S. banking sector, on the contrary to what Powell said yesterday,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Meanwhile, the European Central Bank delivered its latest policy decision, hiking rates by 25 basis points, while ECB President Christine Lagarde hinted at more hikes to come.
Economic data released on Thursday showed the number of Americans who applied for unemployment benefits rose by 13,000 to 242,000 during the final week of April. Meanwhile, the trade deficit narrowed 9% in March to a four-month low of $64.2 billion.
Companies in focus
- PacWest Bancorp PACW,
-48.44%and Western Alliance Bancorp WAL, -38.96%tumbled after a report said that PacWest is weighing its options following the collapse of First Republic bank this week and of other regional banks recently.
- First Horizon shares FHN,
-37.04%were sharply lower after First Horizon Corp. and TD Bank Group TD, +0.20%mutually agreed to end their merger agreement, which was valued at $13.4 billion when it was first announced more than a year ago.
- Qualcomm Inc.‘s QCOM,
-5.45%stock sank after the chip maker’s forecast fell short of Wall Street expectations on weaker-than-expected handset sales that are pushing inventory drawdowns, that were initially expected to last until June, out for “at least the next couple quarters.”
- Zillow Group Inc.‘s shares Z,
+8.73%rose after the company reported first-quarter earnings that topped Wall Street views despite an uncertain residential real-estate environment.
- Shopify Inc. SHOP,
+27.51%stock jumped after the e-commerce company reported a surprise adjusted profit and announced the sale of its logistics business.