Wall Street opens a bit lower as worries about banks persist
But on Friday, some of the hope washed out, and the pair went back to falling. In Switzerland,shares dropped 8%. On Wall Street, shares of First Republic Bank sank nearly 33% to bring their plunge for the week to 71.8%.
After years of enjoying historically easy conditions, banks are now getting a shock after the Federal Reserve and other central banks jacked up interest rates at a blistering pace. The moves are meant to get the world’s high inflation under control. “There’s still a lot of unknowns,” Baird's Mayfield said about what types of investments banks have in their portfolios and how easily they can be turned into cash quickly. “That’s the biggest fear. That’s when markets are typically at their most volatile and most negative. And for most investors who have been in the business for a while, it's hard not to call back to memory 2008, 2009 even if it does look quite different.
Traders largely expect this week’s turmoil to push the Federal Reserve to hike interest rates at its next meeting by only a quarter of a percentage point. That would be the same sized increase as last month’s and half the hike of 0.50 points that some traders were earlier expecting.
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