While the broad market experienced a decline, banks and other financial institutions faced a smaller decrease in shares. Beverly Hills-based PacWest Bancorp saw a surge in share prices as it completed the sale of a $3.5 billion loan portfolio to investment firm Ares Capital. This success was mirrored by other regional banks, such as Western Alliance.
Despite improved economic data and a stabilized banking crisis, the bull market in stocks has recently shown signs of wavering. This is partly due to the end of the era of ultra-low interest rates, dictating that “rates continue to hover at relatively lofty levels, and the Fed is not yet poised to pivot from its tightening trajectory,” says money management strategists at Nuveen in a statement to clients. With the Fed’s continued hawkish tone, many investors worry about a potential change in the US’ economic status, with some assessing the risk of entering into a recession.
It remains to be seen whether these events will have long-term effects on both the markets and financial institutions, but it is evident that ongoing shifts, both domestic and on a global scale, are at the forefront of investor’s minds.