U.S. stock Indexes fall as regional banks tumble
STORY: U.S. stocks ended sharply lower on Tuesday. Blame it on regional bank shares which tumbled on renewed fears over the financial system. The KBW regional banking index hit its lowest level intraday since late 2020. Also, investors digested comments from Treasury Secretary Janet Yellen Monday who said the federal government could be unable by June 1 to meet all of its payment obligations without legislation to raise Washington's borrowing limit.
The Dow slid 1-point-1 percent, the S&P 500 dropped a little more than that and the Nasdaq fell about the same as the Dow.
U.S. regional banks extended losses from Monday after the seizure and auction of First Republic Bank Most of its assets were bought by JPMorgan Chase in a deal brokered by the Federal Deposit Insurance Corp. Two other U.S. regional banks collapsed in March but UBS Managing Director of Wealth Management Brad Bernstein thinks the worst has passed.
“I think there's just skittishness right now today. I mean, tomorrow it could be very different as we've seen day-to-day. It's amazing how how psychology changes, but today, what we're seeing is just concerns about other, you know, are there other issues out there in the regional banking space? Is it over after what happened this week? Did that put it to bed or are there more and there's some short-term uncertainty and a lot of concerns there that you know are are warranted? But hopefully you know, we think that it it's not systemic and that the you know the probably the worst is behind us from what we've seen and that it's more contained than I think the markets are behaving today.”
The Federal Reserve began a two-day meeting with a decision on interest rates due out Wednesday. Investors expect another quarter point hike and await guidance on whether the central bank is likely to pause from here.
One stock outperforming the market was Uber. The ride-hailing company forecast adjusted earnings above estimates after beating expectations in the first quarter. Shares jumped nearly 12-percent.