Even bigger banks were down on Thursday, though not to the same extent as smaller banks. JPMorgan fell 1.5%.
With interest rates no longer at historically low levels, banks are dealing with a very different business environment. The Fed announced its latest rate hike on Wednesday, raising its key overnight rate to a range of 5% to 5.25% from almost zero early last year.
The Federal Reserve has raised interest rates at the fastest pace in decades to curb high inflation. But it does so by slowing the economy, increasing recession risk and hurting investment prices.
The fear now is that even if there are no more bank failures, the turmoil in the sector could lead smaller and mid-sized banks to scale back lending. That in itself, like raising interest rates, would further dampen the economy. Many investors already believe a recession is coming later this year.
A report on Thursday showed the number of U.S. workers filing for unemployment benefits rose slightly more than expected last week. The job market has remained largely resilient, and it remains one of the main pillars underpinning the slowing economy. A more comprehensive report on Friday will provide the latest monthly update on the overall job market.
The Federal Reserve said on Wednesday it may pause rate hikes for now as concerns about the economy mount. But the ECB continued to press on Thursday. Its president, Christine Lagarde, said it “has more work to do and we’re not going to stop.” It did slow the pace of rate hikes, raising rates by just a quarter one percent.
For all the concerns, an earnings season that has been largely better than feared has helped support stocks. S&P 500 companies remained on track for a second straight quarter of declining profits, but the results were mostly better than expected.
Ball shares rose 13.3 percent after the aluminum can and other packaging maker reported higher-than-expected profit. Royal Caribbean rose 8.7% after reporting better-than-expected results in the latest quarter.
Shopify jumped 24.8% after reporting a profit instead of the loss analysts had expected. The e-commerce company also said it was selling off the two largest parts of its fulfillment network and abandoning its logistics ambitions.
Coming up after the close of trading for the day is Apple’s earnings report. It’s the most influential stock on Wall Street because it’s the biggest and after a string of better-than-expected reports from other big tech stocks.
Apple fell 0.5% ahead of its report.
Qualcomm was also a market heavyweight after falling 5.6%. It reported better-than-expected results for its latest quarter, but analysts pointed to disappointing guidance for the upcoming results.
The Market Review newsletter is a summary of the day’s trading. we all get itelectronickday afternoon.