The New York Stock Exchange ended on a mixed note on Monday, overcoming the slippage of the banking sector thanks to giant capitalizations and the good performance of defensive stocks, against a backdrop of a sharp drop in bond rates.
The Dow Jones fell 0.28%, the Nasdaq index gained 0.45% and the broader S&P 500 index fell 0.15%.
Wall Street had opened in the red, frightened by the crisis which has hit the American banking sector for several days, to the point of pushing the American authorities to guarantee, in fact, all of the deposits of American customers on Sunday.
But the indices quickly recovered, to end up around equilibrium, in part thanks to “interest rate-sensitive sectors, which rose thanks to the fall in bond yields”, explained, in a note, Edward Moya. , from Oanda.
The yield on 2-year government bonds thus contracted by almost 0.6 percentage point, to 3.99% against 4.58% on Friday at the close. Over three days, it has just experienced its biggest drop since the famous Black Monday of October 19, 1987.
Operators have completely revised their projections in terms of monetary policy and now see the Fed curb and then lower its rates by the end of the year, while they still counted on Friday on a continuation of forced tightening.
This outlook and the sharp drop in bond yields have benefited some companies in the technology sector, which are heavily dependent on borrowing conditions to finance their sustained growth.
Semiconductor manufacturers Broadcom (+0.27%) and Texas Instruments (+1.31%) took the opportunity to finish in the green.
The New York market has also been able to count on “mega-caps”, giant capitalizations, many of which come from the technology sector. “They have solid balance sheets and do not present any immediate risk,” commented Patrick O’Hare of Briefing.com.
Apple (+1.33%), Microsoft (+2.14%) and Amazon (+1.87%), which weigh more than 4,000 billion dollars in total, pulled the odds, on their own.
Another positive note, the support of defensive stocks, that is to say theoretically less sensitive to the economic situation, such as Johnson & Johnson (+0.96%), Procter & Gamble (+0.69%) or Coca- Cola (+1.01%).
The pharmaceutical sector, also considered defensive, was also on a roll, driven by the announcement of the takeover of the biotech Seagen (+14.51%), specializing in cancer treatments, by the pharmaceutical giant Pfizer (+1 .19%), for 43 billion dollars.
Biotech Amgen (+2.33%) was sought, as were Moderna (+6.95%) or Eli Lilly (+3.01%) laboratories.
If all of these factors have enabled Wall Street to resist, “the concern remains about regional banks”, indicated Nick Reece, of Guinness Global Investors.
“Some fear new bankruptcies, to see the value of the actions (of these banks) destroyed and say that it is not a risk that they want to take”, continued the manager.
On the front line, the Californian establishment First Republic, cut by 61.83% on Monday’s session alone.
Despite its status as a regional bank, First Republic is nevertheless the 14th largest financial institution in the United States and weighs more than 212 billion dollars in assets.
She was not the only one in the sights of investors. Other regional brands suffered, notably Western Alliance (-47.06%), the Cleveland bank KeyCorp (-24.36%) or the Texas establishment Comerica Bank (-27.67%).
According to Patrick O’Hare, “there is still apprehension that these regional banks could face a meltdown in their deposits because customers have been panicked by what has just happened”.
Most of Monday’s burn victims nevertheless reduced their losses at the end of the session. After rising to its highest level in four months, the VIX index, which measures market volatility, also slowed before the close, a sign that the market was coming to its senses.