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Wall Street’s main indexes traded lower on Friday, swayed by financial stocks, as concerns in the banking sector were rekindled after German lender Deutsche Bank’s (RED) the cost of default insurance skyrocketed.
Nasdaq Composite (COMP.IND) slip 0.9%S&P 500 (SP500) fall 0.8%and the Dow Jones Industrial Average (DJI) decline 0.7%. However, all three indexes are on a weekly basis.
Deutsche Bank (RED) fall twelfth% in Frankfurt (after two previous declines) after credit default swaps spike.
Treasury yields fell, mirroring European government yields, as money moved to safety. The yield on the 10-year Treasury note (US10Y) decreased by 5 basis points to 3.35%. 2 year yield (US2Y) decreased by 10 basis points to 3.70%.
The German 10-year yield lost 8 basis points to 2.11%, while the DAX (DAX:IND) lost 1.6%.
“Deutsche’s (RED) business doesn’t look great“, but it’s attractively priced to turn around,” said SA contributor Logan Kane. “However, if the market decides that Deutsche is a bad risk and makes it difficult or impossible for the bank to raise capital, then things could go downhill.”
The KBW Nasdaq Bank Index (BKX) reduce 2.2% on Friday. The decline in financial stocks was driven by major banks including: Morgan Stanley (multiple sclerosis) -4.3%Wells Fargo (WFC) -3.4%JPMorgan Chase (JPM) -2.7%. S&P 500 financial index falls 1.7%.
Meanwhile, the chances of not raising interest rates at the Federal Reserve’s May meeting have risen to 90%, according to federal funds future. Chances of a quarter point rate cut in June have increased sharply to 52.1% from 30% on Thursday.
On the economic calendar durable goods february numbers drop, while US flash composite PMI surprises strengthen in March.
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