Public interest in the banking crisis skyrocketed, and investors are calling for interest rate hikes to pause.
Wall Street shows signs of recovery after last week’s significant declines. Two of the main three indexes in the U.S. stock market opened higher on Monday amid rising hopes of an interest rate hike pause.
Inventors hope and bet that U.S. Federal Reserve officials might pause raising their key interest rates by Wednesday. The decision is heavily influenced by the Silicon Valley closure last Saturday and the Suisse credit bank crisis.
Over the past two weeks, the public’s interest in the banking crisis has skyrocketed due to the failure of three major banks.
This includes Silicon Valley Bank, Signature Bank, and Silvergate Bank. Two of the banks recorded the largest bank failure in the U.S. economy since 2008.
As for the stock market and individual stocks, the S&P 500 benchmark rose by 0.73%, and the Nasdaq moved slightly higher by 0.07%. The Dow Jones was among the top gainers, rising by more than 1.12%.
Tech stocks were mixed in Monday’s session; Apple rose by 1.11%, Tesla was up by 1.14 percent, and Meta added 0.4%. Alphabet and Amazon failed on the opening trading hours by falling by an average of 0.43% and 2%.
According to the Wall Street Journal, the shares of Suisse Bank set a new low record by going down by 48.4%. Other data show that its biggest rival, UBS, rose by more than 7.5%. Express believes that if the Swiss authorities let the Swiss credit bank go down, the macroeconomic effects will be significantly higher.
As a precaution, the Swiss authorities approved a merger deal between UBS and Suisse Credit last week. Last week, UBS officials announced that they would buy the Suisse credit for $3.2 billion.
If the merger happens, this will allow the global market to get some air and replan its next move to survive the banking shockwave. On top of that, the public also showed great concern about the other two banks, First Republic Bank and PacWest Bancorp.
Banking sector volatility increased sharply this week, especially for the First Republic bank, which is the largest rival to the Silicon Valley bank.
Last week, the bank benefited from $30 billion in rescue funding, which was a short-term solution to the bank’s liquidity problems. However, the issue is larger than expected.
On the other hand, other banks show stability in their gains despite market fears. Large banks in the U.S., including Citigroup, Morgan Stanley, and JP Morgan Chase, jumped up to 1.6%.
The U.S. public’s interest shifted its focus to the FED meeting on March 22 to see what decisions the monetary policymakers will come up with. Investors’ bets are split between two interest rate hike expectations. The vast majority believe that the FED will pause raising its key interest rates. The second half sees a high possibility of a quarter-interest rate hike.