Panic subsides on Wall Street as regional bank stocks rebound
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After a few days of panic over the health of the US banking system, Wall Street appeared to take a deep breath Tuesday, media reports said.
Regional bank stocks rebounded Tuesday morning after being pummelled in a Monday selloff that was fuelled by a mix of contagion fears and a pile-on of short-sellers who profit when stocks lose value, CNN reported.
Even after the federal government's intervention on Sunday to backstop deposits in two failed lenders, Silicon Valley Bank and Signature Bank, Wall Street had remained wary of smaller and midsize banks that are seen as having similar risks.
The mood was calmer, even jubilant, on Tuesday, partly thanks to the latest inflation report, which showed price surges abating for the eighth month in a row.
First Republic Bank, a lender some suspected would be the next domino to fall in a banking crisis, surged nearly 60 per cent Tuesday after falling by the same amount the day before. Western Alliance Bancorp's stock rose more than 45 per cent. PacWest Bancorp rose more than 50 per cent after ending Monday down 20 per cent, CNN reported.
Ratings agency Moody's has changed its outlook on the US banking system to "negative" from "stable" after the collapse of three major banks fueled fears of a contagion, The Guardian reported.
Moody's Investors Service said it was making the move in light of three key bank failures in recent days.
In a report, Moody's said that the operating environment for US banks is "rapidly deteriorating".
"We have changed to negative from stable our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY," Moody's said, The Guardian reported.
