The stock market's major indexes deteriorated in the final hour of trading, closing mixed Monday. Investors remain cautious about the banking meltdown, even as it looks like the Fed likely won't raise rates as quickly as anticipated.
Three banks have failed in the past few days. Crypto bank Silvergate, SVB Financial's Silicon Valley Bank and Signature Bank faced runs on their deposits.
The Silicon Valley Bank closure was the second-largest bank failure in U.S. history, and Signature Bank was the third.
The FDIC transferred Signature Bank's deposits to a bridge bank. The bridge bank is a full-service bank operated by the agency as it markets the institution to potential bidders.
President Biden addressed the public Monday morning, saying, "Thanks to the quick action of my administration over the past few days, Americans can have confidence that the banking system is safe."
Still, bank stocks continued to fall. The SPDR S&P Bank ETF lost 10%.
The 10-year U.S. Treasury yield slid 16 basis points to 3.55% as investors fled to lower-risk assets. The 10-year bond posted its largest three-day yield decline since Nov. 20, 2008, during that financial crisis.
The two-year Treasury yield plunged 0.556% to a 4.03% close today, the largest one-day decline since Sept. 15, 2008, and largest three-day decline since Oct. 22, 1987.
The CME FedWatch Tool now sees a 51% chance of a 25-basis-point rate hike at the Federal Reserve's March meeting. Nearly 49% expect no change in rates.
NYSE volume was higher and Nasdaq volume was lower than on Friday at the same time of day, in preliminary numbers.
Major Stock Market Indexes Have A Wild Ride
The Dow Jones Industrial Average fell 0.3%. The S&P 500 dipped 0.2%. The Nasdaq composite fared the best, reclaiming 0.5%. The small-cap Russell 2000 fell 1.6%, weighed down by its 15% banking component.
The Dow, Nasdaq and S&P 500 remain below their 50-day and 200-day moving averages.
The tech-heavy Nasdaq 100-tracking Invesco QQQ Trust ETF regained 0.7%. The Innovator IBD 50 ETF fared worse than the major indexes, losing 1.3%.
Crude oil lost 3% to $74.43 per barrel.
Gold futures rallied 2.7% to $1,917 per ounce. The SPDR Gold trust ETF gained 2.3%, as investors looked outside the stock market for a place to stash their cash.
The dollar fell against major currencies as the banking problems cut the odds of higher interest rates. The U.S. currency often follows moves in Treasury yields.
The WSJ Dollar Index, which tracks the dollar against a basket of currencies, fell 1%. Invesco DB U.S. Dollar Bullish fell 0.9% after meeting resistance at the 200-day line last week.
Bitcoin futures soared 22.4% to $24,430 as investors sought other assets, and federal aid came to banks that cater to crypto clients.
Stock Market Worries: Bank Stock Continues The Sell-Off
First Republic Bank plunged 61.8% to continue its sell-off on liquidity concerns, after trading was temporarily halted earlier in the session. The regional bank plunged despite rescue funding from the Federal Reserve and JPMorgan Chase.
Regulators took over Signature Bank on Sunday, making it the third-largest bank failure. Western Alliance Bancorp fell 47.1% as regional banks saw more weakness.
The SPDR Select Regional Bank ETF shed 12.3% as the sector sold off. SPDR Select Financial dropped 4%.
Wells Fargo fell 7.1% in heavy volume.
Charles Schwab dropped 11.6%, after trading in the stock was temporary halted. Citigroup upgraded Schwab to buy from neutral, despite the negative stock action.
Other Stock Market Movers: Two Medical Stocks Post Gains
Illumina gapped up 17% in heavy volume, on news that activist investor Carl Icahn is looking to nominate three people to the gene-sequencing company's board. Shares rose above the 50-day and 200-day lines. ILMN was the S&P 500 biggest gainer today.
Seagen soared 14.5% on news that Pfizer will acquire the cancer treatment developer for about $43 billion. PFE rose 1.2% on the news.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
