Silicon Valley Bank and its impact on the US stock market
- 10 March 2023
- Posted by: Federica Montella
- Categories: eToro CopyTrader, Investing
Wall Street went down on Thursday
Yesterday was a negative day for the US stock market and all three major indexes reported losses.
The S&P 500 finished at -1.85%, the Nasdaq ended the trading session at -2.05% and the Dow Jones closed at -1.66%.
Worries regarding the health of the banking sector have driven the selloff.
The investors’ sentiment is fear, as indicated in the graph below:
Sentiment indicator – Fear & Greed Index
The market sentiment is 34, in “Fear” mode.
The case: Silicon Valley Bank
The Silicon Valley Bank is a technology-focused lender institution located in Santa Clara, California.
During the pandemic, in 2021, the deposits and the bank’s assets significantly grew and the majority of the liquidity has been used for buying the U.S. Treasurys bond and other government-sponsored debt securities.
The Federal Reserve’s action to reduce inflation by increasing the interest rates greatly impacted the bond holdings that started to lose value over time. For this reason, the Silicon Valley Bank had an important and fast decline in deposits.
Yesterday’s selloff on the US stock market has been driven by the loss of $1.8bn circa by the SBV because it has been forced to sell part of its portfolio of securities to cover up the decline in customer deposits.
The investors’ worry is that other Banks will be following the Silicon Valley Bank because all the banks have holdings in long-dated securities, which are no longer profitable.
That’s why the shares of the four US biggest banks, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have been particularly impacted by the difficulties of SBV, registering a significant loss of more than 4% in one day.
What to watch today
The Bureau of Labor Statistics will release today at 13:30 GMT the U.S. Nonfarm Payrolls for the month of February.
Markets will continue to be volatile today, due to these events.
Portfolio update
I am currently neutral and cautious about the stock market.
I hold long and short stock positions and aim to profit regardless of the market direction.
If you are already copying my portfolio, please keep the copy open.
If you are thinking of copying me, now could be the right time, if you can invest for the long term (years).
Remember to copy the open trades to optimize the copy.
Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.
Thank you, everyone. Have a nice day!
Steps to follow to copy my portfolio automatically:
1. Create an eToro account here: https://federicamontella.com/go/etoro/
2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)
3. Go to my profile page: https://federicamontella.com/go/etoro-passionforprofit/
4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)
5. Enjoy, it’s all automatic. You will make passive income 24/7
Let me know if you have any questions.
Federica Montella
eToro Popular Investor
Follow me on social media
