Markets Dip as Fed Raises Rates Despite Banking Concerns

Table showing the performance of major U.S. financial indexes on March 22, 2023


Key Takeaways

  • U.S. equities indexes fell on March 22, 2023, as the Fed hiked interest rates even though markets remained concerned about issues in the banking sector.
  • The Dow, Nasdaq, and S&P 500 all posted losses of approximately 1.6% during Wednesday's session.
  • Bank stocks saw significant declines, with First Republic (FRC) turning in the worst performance among S&P 500 stocks on uneasiness about its risk of failure.

U.S. equities sank after the Federal Reserve raised interest rates another 25 basis points (bps) in its effort to bring down inflation. The decision came despite expectations by some that policymakers might pause hikes because of concerns about the banking sector in the aftermath of the collapse of Silicon Valley Bank and Signature Bank. Fed Chair Jerome Powell noted that the banking stress will likely cause tighter credit conditions that will impact the economy. The Dow, S&P 500, and Nasdaq all dropped about 1.6%.

Bank stocks tumbled, with regional banks hit especially hard. First Republic Bank (FRC), which is seen at risk for failure, was the worst-performing stock in the S&P 500. Shares of Comerica (CMA) plunged 8%, and those of Lincoln National Corporation (LNC), M&T Bank (MTB), and U.S. Bancorp (USB) dipped more than 7%. Large bank stocks also fell, with shares of Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) losing 3%.

All the stocks in the Dow were in the red, led lower by Nike (NKE), with shares down almost 5% after the athletic apparel firm warned its effort to clear out excess inventory will weigh on margins. Boeing (BA) shares lost altitude as CFO Brian West said the plane maker's KC-46 tanker program will take additional charges because of problems with the center fuel tank.

Few S&P 500 Winners

Only 10 stocks in the S&P 500 were in positive territory. Match Group (MTCH) shares topped the list, rising 2%. Shares of Nvidia (NVDA) and Advanced Micro Devices (AMD) gained 1% on optimism about demand for their artificial intelligence (AI) products. Investors pushed money into the perceived "safe haven" of gold, and that lifted shares of Newmont Corporation (NEM) and several rival gold miners.

The yield on the 10-year Treasury note declined. Oil futures added 0.5%. The U.S. dollar lost ground to the euro, pound, and yen. Prices for major cryptocurrencies were lower.

Table showing the S&P 500 stocks with the biggest gains and losses on March 22, 2023


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