Dow Jones Rises with Gold and Bitcoin Amid Bank Selloff; Schwab rout stokes contagion fears

The Dow Jones Industrial Average rose in Monday’s noon hour after early volatility, trying to recoup last week’s strong selloff. InInvestors remain on high alert, cautious about the banking crisis that triggered the collapse of the SVB. Depositors at the closed bank now have access to their money through an FDIC bridge bank created with “normal banking hours and operations, including online banking.”


The Crash of a Crypto Firm silver gate (SI) added to market woes as regulators also shut down Signature Bank (SBNY), the third-largest US bank, which also had significant exposure to crypto. Crypto exchange Coinbase (COIN) said it had $240 million in cash with Signature Bank.

Depositors will be reimbursed under “systemic risk waiver” rules that also cover SBNY.

Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and FDIC Chairman Martin Gruenberg said any losses the FDIC suffers from supporting depositors who exceed the $250,000 limit will be recovered “through an assessment banks, as required by law”. Shareholders will not be protected.

To ward off some contagion risks, a new “Bank Term Funding Program” will provide loans for up to one year, secured by US Treasury bonds, to FDIC member banks.

Charles Schwab (SCHW) plunged nearly 20% and pared losses after an upgrade from Citibank from neutral to long, with a price target of 75.

Leader of the Dow Jones JPMorgan Chase (JPM) and Bank of America (BAC) fell. Regional bank First Republic (FRC) more than 60% cratered. The SPDR S&P Regional Banking (KRE) ETF fell more than 9%.

Healthcare stocks UnitedHealth Group (UNH) and Johnson & Johnson (JNJ) performed better in the Dow Jones, as well as defensive plays walmart (WMT) and Home deposit (HD).

The yield on the benchmark 10-year Treasury fell 20 basis points to 3.49% as investors sought refuge. Gold and bitcoin went up. The S&P volatility index fell 4% after jumping 16% to hit a five-month high near 30.

Economic data: analysts’ point of view

Tuesday’s and Wednesday’s inflation numbers are also being watched. Analysts expect inflation to ease to 6.0% from 6.1% in January. The odds of a 25 basis point hike in March stand at 47.6%, according to the CME FedWatch Tool. However, analysts from Goldman Sachs (GS) believes the Fed will suspend rate hikes at the meeting. The dollar fell on Monday.

The S&P 500 rose at 12 p.m. ET on Monday. The real estate, healthcare and utilities sectors advanced.

Shares of You’re here (TSLA) were flat after Wolfe Research analyst Rod Lache downgraded the stock to keep it long without changing the 185 price target for EV stock.

The Nasdaq was the biggest gainer at midday. Shares of Illuminated (ILMN) led with significant gains. Activist investor Carl Icahn is running for three seats on the company’s board, according to reports from The Wall Street Journal. Modern (ARNM) and Regeneron Pharmaceuticals (REGN) also increased on time.

Volume increased on the Nasdaq and NYSE from the same time Friday.

Crude oil plunged nearly 3% to trade at $74.69 a barrel.

Stocks move today away from Dow Jones

Isolate (PODD) rose replacing the SIVB in the S&P 500 index. Seen (SGEN) escaped from a cup base with handle while Pfizer (PFE) has announced plans to buy the cancer drug giant for $43 billion.

Earnings continue this week with reports of Network Technologies (ARRY), Pharmaceutical catalyst (CPRX), five below (FIVE), fedex (FDX), Adobe (ADBE) and General dollar (DG). FDX fell while ARRY, FIVE, CPRX and DG rose.

Palo Alto Networks (PANW) is on hold as it maintains its 21-day line. Iridium Communications (IRDM) resumed its 50-day line. Both are on IBD Leaderboard.

Please follow Vramakrishnan on Twitter for more stock market updates today.


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