The stock market had a volatile trading session on Friday, but ended the week on a positive note. The Dow Jones Industrial Average rose by 0.41%, the S&P 500 by 0.56%, and Nasdaq Composite by 0.3%. For the week, the Dow gained 0.4%, while the S&P 500 and Nasdaq gained 1.4% and 1.6% respectively.
One reason for the market’s improvement was a bounce back in regional bank stocks, which gained 3.01% during the session. However, fears that the banking crisis was affecting Deutsche Bank caused an initial selloff, with the German lender’s shares falling by 7% before recovering slightly to close 3.11% lower.
The sell-off was triggered by a rise in Deutsche Bank’s credit default swaps, which raised concerns about the health of the European banking industry. However, European Central Bank President Christine Lagarde reassured investors that euro zone banks are resilient with strong capital and liquidity positions, and that the ECB could provide liquidity if needed.
Investors also continued to evaluate the Federal Reserve’s latest policy move, which hiked rates by a quarter-point but hinted that rate hikes may be coming to an end. Fed Chair Jerome Powell noted that credit conditions have tightened, which could put pressure on the economy.
In response to recent bank closures, Treasury Secretary Janet Yellen assured that regulators are ready to take action if needed to stabilize U.S. banks.
Despite concerns over Deutsche Bank, President George Ball of Sanders Morris Harris believes the bank is financially sound, and that the market’s reaction is based on nervousness rather than any fundamental issue.
