The final New York session of the week is going to be volatile. Traders voice concern about the resilience of the banking sector despite large-scale emergency measures. Wall Street is sensitive to the news on this sector and responds both to positive and negative news. Stock investors still hope that snags of commercial banks will assure the US Fed to hit the pause button.

The benchmark stock indices closed in the green yesterday after some top US lending institutions gave a helping hand to the ailing First Republic Bank. Stock investors grasped at a glimmer of hope. Thus, the Dow Jones jumped by 371 points or 1.17%. The Nasdaq logged the biggest gain and closed 2.48% up. The S&P 500 added 1.7% to close at 3,960.
On Friday, investors abandoned the hope. The stock indices traded mixed during the European session. They went down in sync in the New York pre-market. Wall Street indices shed 0.1-0.8% before the opening bell. The S&P 500 is expected to trade in the corridor between 3,860 and 3,990.
Top American banks injected 30 billion dollars in the struggling First Republic Bank to save the lender which was affected by the crisis triggered by the collapse of two other average banks which declared bankruptcy this week.
The rescue operation was conducted by top US banks such as JPMorgan, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley and managed by Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell, and JPMorgan boss Jamie Damon.
Shares of JPMorgan and Morgan Stanley climbed by 1.95% and 1.89% respectively. The much-needed cash supported the First Republic Bank whose shares jumped by 9.98%.
The positive sentiment spread over to other lenders. Shares of Alliance Bancorp and PacWest Bancorp surged by 14.09% and 0.7% respectively after a weak opening.
The domestic banking index rose by 3.26%. The banking sector in the S&P 500 grew by 2.16%.
The US Treasury Secretary stated that the US banking system remains healthy and Americans can be certain that their deposits would be withdrawn if necessary.
Credit Suisse shares listed on US exchanges went up after the bank received a bailout worth 54 billion dollars from the Swiss National Bank to reinforce liquidity and investors’ trust.
The macroeconomic data was less promising. The weekly initial unemployment claims sank twice last week than expected. It indicates the strength in the labor market that might encourage the central bank to raise interest rates.
The rally of high-tech stocks was propped up by shares of social media platforms. Meta and Snapchat shares rose by 3.63% and 7.25% respectively after the US administration threatened to ban TikTok.
Today pessimism resurfaced on Wall Street. The rescue operation has borne its fruit and traders are now focused on further steps to settle the crisis.
The stock market was hit by sell-offs in the early trading hours. Banks again arouse concern. Shares of First Republic Bank shed another 13%, having lost more than 70% in 10 days.
The First Republic Bank halted paying dividends and unveiled its current state of affairs. The bank borrowed from 20 to 109 billion dollars from the Federal Reserve in the period from March 10 until 15.
Though new deposits soothed the ailing bank, they are provided at current market rates that will erase net income from interest rates. With such weak profits, the bank will have to sell business.
Other average US banks such as Western Alliance and PacWest dropped by 2% and 5% respectively.
Credit Suisse shares again resumed a decline on Friday. They fell by 3% despite the fact that shares of other European banks rebounded by almost 1%.
As of Wednesday, the struggling banks obtained the record 152.9 billion dollars under the Fed lending package. Besides, they borrowed 11.9 billion as loans under the Fed’s newly-established emergency bank credits. The overall amount of loans provided beat the previous record of 112 billion dollars during the banking crisis of 2008.

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