by Stephen Culp
NEW YORK (Reuters) – The New York Stock Exchange ended lower on Friday, after a week marked by the banking sector crisis and worries about a possible recession.
The Dow Jones index fell 1.19%, or 384.57 points, to 31,861.98 points.
The broader S&P-500 lost 43.64 points, or 1.10%, to 3,916.64 points.
The Nasdaq Composite fell for its part by 86.76 points (-0.74%) to 11,630.51 points.
SVB Financial Group, the bank behind the crisis in the sector, announced on Friday that it had filed for bankruptcy protection in order to reorganize itself.
“(The sale) is an overreaction,” said Oliver Pursche, vice president of Wealthspire Advisors in New York. “Some concerns about overall liquidity and a potential cash crunch are well founded, however.”
Worries of a deep liquidity crisis have spread to European markets, where distrust of the banking sector has been fueled by the setbacks of Credit Suisse.
The banking compartment recorded its biggest two-week decline since March 2020, when the COVID-19 pandemic pushed the US economy into the deepest and most brutal recession on record.
The market is now awaiting decisions next week from the US Federal Reserve (Fed).
“The mini banking crisis is increasing the chances of a recession and accelerating the slowdown in the economy’s downturn schedule,” Oliver Pursche explained.
“It’s natural for the Fed to reconsider its course, but it’s still clear that while inflation is slowing, it remains a serious concern and needs to be brought under control.”
In stocks, First Republic Bank, PacWest Bancorp and Western Alliance fell.
FedEx, for its part, rose after raising its annual profit forecast.
(With contributions from Shubham Batra and Amruta Khandekar; Camille Raynaud)
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