The S&P 500 Index (SP500) has had a volatile week, posting losses in three of its five sessions, but ultimately ending the week on a positive note. The benchmark index closed at 3,916.64 points, adding 1.43% to its value for the week. The SPDR S&P 500 Trust ETF (NYSEARCA:SPY) also rose 1.06% for the week. Despite the current worst financial crisis in 14 and a half years, the S&P 500 managed to perform well.
The impact of the financial crisis was felt by many banks, including two U.S. regional banks, Signature Bank (SBNY) and SVB Financial’s (SIVB) Silicon Valley Bank, which were taken over by U.S. regulators due to liquidity issues. Major banks like JPMorgan (JPM) and Bank of America (BAC) pledged $30B in deposits to First Republic Bank (FRC) after depositors withdrew their cash. The Federal Reserve and the government have taken steps to support banks and quell fears over instability in the financial system. Even Europe was hit by the crisis when Switzerland’s second-biggest bank, Credit Suisse (CS), revealed “material weaknesses” in its reporting procedures, causing a rout in shares of the lender. The Swiss central bank stepped in, providing the bank with a $54B lifeline.
Investors have sought the safety of assets such as bonds and gold, while also pouring money into technology stocks, which helped lift the S&P 500. The tech-heavy Nasdaq Composite (COMP.IND) gained over 4% for the week.
The recalibration of expectations towards a 25 basis point rate hike by the Fed at its two-day monetary policy committee meeting, starting on Tuesday, spurred the weekly gain in the benchmark S&P. Investors are betting that the central bank would be unwilling to hike rates by a larger quantum in view of the turmoil in the financial sector. Economic data that showed a moderation in inflation has also sparked the adjustments in Fed rate expectations. Consumer price index for February rose, but at a smaller rate than in January, while producer price index unexpectedly fell.
Seven of the S&P 500 sectors ended in the green, led by heavyweight Communication Services and Technology. Energy was the top loser, as oil prices declined due to the flight to safe assets. Financials lost about 6%.
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In conclusion, the S&P 500 (SP500) had a volatile week amidst the worst financial crisis in 14 and a half years. Despite that, the benchmark index managed to add 1.43% to its value by the end of the week. The recalibration of expectations towards a 25 basis point rate hike by the Fed, as well as economic data that showed a moderation in inflation, are among the factors that influenced positive performance. Investors have sought safety in bonds and gold while putting money into technology stocks. The Seeking Alpha Catalyst Watch is a valuable resource for future insights.#gains #week #worst #bank #crisis #SPY