On Wall Street, share prices fell sharply on Thursday as investors were uncertain ahead of the publication of the employment report in the USA.
The Dow Jones slipped 1.66 percent, 32,254 points, while the S&P 500 sank 1.85 percent, 3,918 points, and the Nasdaq index 2.05 percent, to 11,338 points, reports Mina.
At the same time, the S&P index of the financial sector sank the most, four percent, which is a consequence of investor uncertainty, after SVB Financial Group, a large creditor of the technology industry, announced a capital increase plan to improve the balance sheet, which is under pressure from losses and falling deposits.
SVB’s share price sank 60 percent, and Signature Bank’s share price fell sharply, 12 percent after its cryptocurrency branch announced liquidation.
The banking sector is already under pressure because investors fear that the aggressive increase in interest rates by the US central bank, the Federal Reserve (Fed), will lead to a recession and, thus, to banks’ loan losses.
Pressure on financial sectors
Thursday saw not only financial sectors under pressure but everyone else too; investors were unwilling to take risks before the looming release of the employment report on Friday, which could potentially have a major influence on the market’s future direction.
A Reuters poll of analysts resulted in an approximate 205,000 increase in US employment in February, a much slower growth than the 517,000 seen in January.
Recent figures suggest sustained labor demand, pointing to potential increases in wages and expenditures, thereby necessitating an ongoing boost in Fed interest rates.
The Federal Reserve’s Chairman Jerome Powell said this week that the bank is willing to take further action if future economic data indicates that stricter measures are required to restrain inflation.