Marketbites: Bond Yields Rise
Portfolio Manager Commentary:
The Nasdaq Composite fell Tuesday as an uptick in rates put pressure on the tech-heavy index. Bond yields rose, with the rate on the 2-year U.S. Treasury note climbing back above 4%, putting pressure on stocks and tech names in particular. Rising rates make future profits, like those promised by more risky growth companies, less attractive. “For the second day in a row, interest rates are rising, and the markets are being led by the more economically sensitive sectors, such as energy and industrials,” said Brian Levitt, global market strategist for Invesco. “Technology stocks are among the laggards, which is often the case as interest rates rise,” he added. “For the time being, investors seem to be looking beyond the challenges in the financial sector and recognizing that U.S. economic growth continues to be resilient.”
Regional U.S. bank worries have been assuaged thanks in part to policymakers' efforts to alleviate the challenges. However, bank stocks slipped on Tuesday following a contentious hearing at the Senate Banking Committee. Three top regulators each said they favor more stringent rules for banks with more than $100 billion in assets.
Chart of the Day:
First Citizens Bancshares Inc., one of the nation’s largest regional banks, is buying large pieces of Silicon Valley Bank more than two weeks after the lender’s collapse sent tremors through the banking system. The FDIC said First Citizens is acquiring all of Silicon Valley Bank's deposits, loans, and branches. Shares of First Citizens surged more than 50% after the news on Monday. Shares of other regional banks including First Republic Bank, PacWest Bancorp and Western Alliance Bancorp were also higher.
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