(Reuters) – The New York Stock Exchange opened lower on Thursday amid renewed concerns about the health of U.S. regional banks and the day after an interest rate hike by the Federal Reserve.
In early trading, the Dow Jones index lost 68.63 points, or 0.21%, to 33,345.61 points and the broader Standard & Poor’s 500 fell 0.23% to 4,081.37 points.
The Nasdaq Composite lost 0.23%, or 28.07 points, to 11,997.26.
Despite assurances from regulators that the crisis that began with the collapse of Silicon Valley Bank and Signature Bank in March was under control, a further fall in stocks of U.S. regional banks, including PacWest, has dampened optimism about to a likely pause in Federal Reserve interest rate hikes.
PacWest stock fell 41% at the open Thursday after the Los Angeles-based entity said it was in talks with potential partners and investors about strategic options.
This new setback for a regional American bank comes shortly after that of First Republic Bank, of which JPMorgan agreed to buy most of the assets, in what was the most significant failure of a American bank since the financial crisis of 2008 .
“It looks like PacWest is in trouble, and I would be very surprised if it weren’t for the same reasons that preceded it…” said Stuart Cole, chief macroeconomist at Equiti Capital.
This new turmoil among banks comes as the US Federal Reserve (Fed) announced on Wednesday that it was raising its main interest rate by 25 basis points, as expected, paving the way for a possible pause in its hike campaign. rates.
The optimism was short-lived, however, as U.S. central bank President Jerome Powell later warned that it was too early to say with certainty that the rate hike cycle was over.
The Labor Department also announced on Thursday that jobless claims rose more than expected in the United States during the week to April 29, a sign that the labor market is gradually easing amid high interest rates. .
In PacWest’s wake, regional entities KeyCorp, Valley National and Zions Bancorp shed 4-5%, while Western Alliance Bancorp shed 16%, even after claiming it hadn’t experienced any unusual deposit outflows at the aftermath of the First Republic crisis.
On business news, Paramount Global, which posted first-quarter revenue below expectations on Thursday, fell 21.7%
Chipmaker Qualcomm, which on Wednesday reported weaker-than-expected third-quarter revenue and profit, lost 7.2%.
(Written by Diana Mandia)
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