Investors are getting noticeably jittery about the state of the economy. Banks stocks, which serve as indicators of how the economy is doing, sold off sharply Thursday.
SVB Financial, parent of tech-focused Silicon Valley Bank, plunged 60.41% after the company announced it was raising more than $2 billion in new capital to offset losses. Regional banks got slammed by the news. For instance, PacWest Bancorp sank 25.45%, a 52-week low, and First Republic Bank dropped 16.51% to trade at a 3-year low. Major banks weren't spared: Bank of America and Wells Fargo both fell by more than 6%.
Those losses pushed down the S&P financial sector 4.1% to give it its worst day since June 2020. Unsurprisingly, the S&P ended the day 1.85% lower. The other two major indexes didn't fare any better. The Dow Jones Industrial Average lost 1.66% and the Nasdaq Composite sank 2.05%.
There was a glimmer of good news for investors worried that the Federal Reserve might intensify rate hikes. Initial jobless claims for the week ended March 4 hit 211,000, the highest since Dec. 24, while continuing claims were up 69,000 to a one-year high of 1.72 million. In combination with yesterday's data on layoffs in December rising and wage growth decelerating in February, these data points suggest the labor market might finally be cooling.
Still, economists are predicting February's jobs report will show sustained strength in employment. But remember that everyone thought there would be 187,000 new jobs in January — only to be stunned by the 517,000 that was eventually reported.
