US stock market falls
Stocks ended the week with a decline as investors dealt with persistent banking issues in anticipation of the upcoming Federal Reserve meeting.
The Dow Jones, S&P 500, and NASDAQ Composite all finished the day down. This followed a rally on Thursday after big banks like JPMorgan and Bank of America agreed to invest in First Republic, which has been struggling. Despite this bailout, concerns from investors remained over the longer-term prospects of these firms.
Investors reacted positively to the University of Michigan's (UOM) preliminary consumer sentiment report, which revealed a decrease in inflation expectations to their lowest level since April 2021. Despite this, crude oil prices continue to drop amid concerns of a global economic slowdown and supply issues.
The CME FedWatch Tool currently indicates a 62.7% likelihood of a 25 basis-point increase at the upcoming Fed meeting, with a 37.3% probability of no hike.
Additionally, Friday marked a triple witching day, a quarterly occurrence when stock options, stock index options, and stock-index futures contracts all expire on the same trading day, which has historically shown a negative impact on the indexes.
The 10-year Treasury yield settling below 3.4% on Friday has caused concern for investors. This drop from last week's 4% level is significant. According to analysts at Bespoke Investment Group, the recent volatility in the Treasury market may be due to "forced buying and selling" rather than incorporating all available information.
On Friday, the S&P 500 underwent a significant reshuffle, with 14 stocks being reclassified into different sectors. Major corporations such as Visa, Mastercard, and PayPal were among those affected.
Gold futures for April delivery added 3.68%, or 70.70, to reach $1.00 per troy ounce. In other commodities, WTI crude futures for April delivery fell 2.94%, or 2.01, to $66.34 a barrel. Brent crude futures for May delivery fell 2.66%, or 1.99, to $72.71 a barrel.
The USD index futures were down 0.55% to 103.52.
Overall, investors are cautious as they await the Fed's next policy decision on March 22. The CBOE Volatility Index, which measures options trading on the S&P 500, rose on Friday.
