Banking System Health Affects Fed Optimism
The banking system's health is overshadowing the positive sentiment that the Federal Reserve may be approaching the end of its interest rate hikes. Recent economic data indicates that the Fed's actions have begun to curb inflationary pressures.
PacWest Bancorp Shares Plummet, Impacting Other Banks
PacWest Bancorp shares fell 49% on Thursday, leading to a halt in trading, after the company announced it was exploring strategic options, including a potential sale. This news comes after regulators seized First Republic Bank and JPMorgan's agreement to purchase deposits and assets. Other regional bank stocks, like KeyCorp and Zions Bancorporation, are also feeling the strain.
Fed Raises Interest Rates, Nearing End of Hiking Cycle
On Wednesday, the Federal Reserve raised interest rates by a quarter percentage point, marking the highest rates since 2007. Chair Jerome Powell hinted that the Fed may be nearing the end of its rate hiking cycle, but the final decision will be based on data. Futures traders predict this pause could happen in June.
Unemployment Claims Rise, April Jobs Report Awaited
New jobless claims increased to 242,000 last week, a slightly higher number than expected. The upcoming April jobs report will provide a more comprehensive view of the U.S. labor market.
Apple and Qualcomm Shares Drop Ahead of Earnings Reports
Apple shares fell 0.9% before the release of its quarterly earnings report, while Qualcomm shares declined by 5.7% after a weaker-than-anticipated guidance.