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Extreme Fear is driving the US market after SVB collapse

ByFederica Montella
Published 16/03/2023, 12:15
Updated 28/07/2023, 11:55

Wall Street finished lower yesterday

On Wednesday, only the Nasdaq reported a small gain among the major US indexes.

The S&P 500 finished at -0.70%, the Nasdaq ended the trading session at +0.05% and the Dow Jones closed at - 0.87%.

The US stock market selloff has been driven by worries of a domino effect regarding the banking sector, after the Silicon Valley Bank collapse.

On the other hand, the tech sector is performing well with stock gains reported by Meta, Netflix (NASDAQ:NFLX), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).

The investors' sentiment is Extreme fear, as indicated in the graph below:

Sentiment indicator - Fear & Greed Index

The market sentiment is 18, in “Extreme Fear” mode.

The latest US economic data

Yesterday, retail sales data were down 0.4% in the month of February. Consumer spending has declined more than the expectation of 0.3%.

The Producer Price index has also gone down more than forecasted. The figure for the month of February is -0.3% versus the 0.1% expected.

The above data are showing a cooling of inflation in the US and investors are betting that the Federal Reserve, during the next meeting, will hike the interest rate by 25% and not 0.50% as expected one week ago (before the SVB failure).

What to watch today

The initial jobless claims for the second week of March are going to be published today at 12:30 GMT.

The claims are forecasted to be 205,000 down from the previous 211,000.

Markets will continue to be volatile today, due to these events.

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