Wall Street’s main indexes fell on Thursday after the European Central Bank raised its main interest rate, despite fears of a global banking crisis, stoking concerns that the Federal Reserve could also tighten monetary policy for longer.
The European Central Bank approved a 50 basis point rate hike on Thursday, sticking to its fight against inflation despite turbulence in financial markets triggered by the collapse of Silicon Valley Bank and Signature Bank.
“The ECB’s decision has several readings. One is that the ECB does not share the fear about the banking sector. The other is that it believes the risks of high and embedded inflation are too great not to address,” said Neil Birrell, chief investment officer at Premier Miton Investors.
“It’s interesting that there isn’t much guidance. Being data-driven in policy decisions can probably also mean being acutely aware of financial and market stress.”
First Republic Bank shares fell 29.8% after a Bloomberg News report said the regional lender was exploring a sale, among other options.
Your competitors Western Alliance Bancorp and PacWest Bancorp also fell, down 13.1% and 14.6%, respectively.
KBW regional banking index fell 1.6%, while the banking index S&P 500 It fell 1.2%.
Large US banks such as JPMorgan Chase & Co (NYSE:.JPM), Citigroup (NYSE:C) and Bank of America Corp (NYSE:BAC) were also down, between 0.3% and 1.0%.
However, Credit Suisse (SIX) shares:CSGN), which is listed in the United States, rose 0.5% after the bank secured a credit line of up to $54 billion from the Swiss National Bank to bolster liquidity and investor confidence.
Data showed the number of Americans filing new jobless claims fell more than expected last week, pointing to continued labor market strength, which could push the Federal Reserve to keep raising rates.
The Industrial Average Dow Jones It lost 175.89 points, or 0.55 percent, to 31,698.68, while the S&P 500 was down 12.24 points, or 0.31 percent, at 3,879.69. The Nasdaq Composite It fell 20.45 points, or 0.18 percent, to 11,413.60.