NEW YORK: Wall Street’s main indexes cut gains on Monday as investors assessed risks to the banking sector following a buyout deal for Silicon Valley Bank’s assets, while a rise in Treasury yields pressured rate-sensitive technology and other growth stocks.
First Citizens BancShares Inc will acquire parts of Silicon Valley Bank, which collapsed earlier this month in the largest bank failure since the 2008 financial crisis, unleashing fears about a liquidity crunch in the sector.
First Citizens’ shares jumped 47.6%, while First Republic Bank rose 15.4% following a report that US authorities were considering more support for banks.
While the buyout of SVB’s assets had lifted sentiment earlier in the day, the three main indexes came off session highs after news that cryptocurrency exchange Binance and its CEO, Changpeng Zhao, were being sued over regulatory violations.
Crypto stocks such as Coinbase Global, Marathon Digital and Riot Platforms fell between 7% and 9%.
“We saw bitcoin roll over in the last few minutes here and you’re seeing a lot of crypto stocks roll over with that,” said Dennis Dick, a trader at Triple D Trading.
“There’s just so much uncertainty here and every time we seem to get a rally, we find new sellers and that’s because we don’t know how far this banking crisis is going to go.”
At 11:45 a.m. ET, the Dow Jones Industrial Average was up 182.40 points, or 0.57%, at 32,419.93, the S&P 500 was up 8.08 points, or 0.20%, at 3,979.07, while the Nasdaq Composite was down 46.01 points, or 0.39%, at 11,777.95.
The KBW Regional Banking index was up 0.8% after erasing some gains, while the S&P 500 Banks index rose 2.5%.
Regional banks Western Alliance Bancorp and PacWest Bancorp were up 4.9% and 4.4%, respectively.
Shares of major US banks JPMorgan Chase & Co, Citigroup and Bank of America, however, held on to gains of between 1% and 3%.
As US Treasury yields rose on Monday amid some easing in bank contagion worries, major growth stocks Meta Platforms , Microsoft Corp, Apple Inc and Alphabet fell between 0.6% and 2.5%.
Among key S&P 500 sectors, information technology and communication services were in the red, while financial stocks led sectoral gains, up about 1.4%.
Traders largely expect the Federal Reserve to pause rate hikes in May in light of the banking crisis, though the bets of a no-hike scenario have come down to 60.6% from 83.2% on Friday, according to CME Group’s Fedwatch tool.
Investors are also awaiting a host of economic data this week, including an inflation report that could give more clues about the Fed’s monetary policy path.
Tesla Inc rose 2.0% with Barclays expecting the electric carmaker’s first-quarter deliveries to beat estimates.
Advancing issues outnumbered decliners by a 2.67-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 6 new 52-week highs and no new lows, while the Nasdaq recorded 36 new highs and 82 new lows.