Silicon Valley Bank failure helps hammer market
- Matt Phillips, author of Axios Markets
A Brink's armored truck idles outside the shuttered Silicon Valley Bank headquarters in Santa Clara, Calif., yesterday. Photo: Justin Sullivan/Getty Images
Stocks just suffered their worst week of 2023, amid the remarkable failure of Silicon Valley Bank.
What happened: The S&P lost 4.6% in the week ending Friday, its worst weekly showing of the year. It was also the worst week since September.
- The selloff started Tuesday, after Federal Reserve Chair Jerome Powell opened the door to a more rapid pace of rate hikes to rein in resurgent inflation.
- The losses deepened on Thursday, after Silicon Valley Bank's sudden move to raise cash spooked investors and depositors, sending bank shares reeling.
- On Friday, the FDIC's seizure of Silicon Valley Bank seemed to stun the markets and raise questions about whether serious problems were developing in the financial sector.
Why it matters: Last year's 19.4% drop in the S&P 500 was the worst since 2008, and investors had hoped a swift snapback in share prices this year would help repair their 401(k)s.
Flashback: Stocks did burst out of the gates strong, with the S&P rising nearly 9% through early February.
Yes, but: Resurgent inflation pressures, tough talk from the Fed and, now, jitters around the financial sector have vaporized almost all those gains.
- As of Friday's close, the benchmark index is now up just 0.6%
What's next: Over the weekend, we'll be waiting for word on whether the FDIC can arrange a shotgun wedding between SVB and a stable financial institution, in order to make sure SVB's uninsured depositors — which include many well known tech firms and investors — will keep seamless access to their cash.