US stocks closed mixed on Monday in a volatile trade, but bank shares plunged on fears that the collapse of Silicon Valley Bank (SVB) could spark contagion throughout the banking system.
The US stock indices opened lower in morning session. In midday trading, all the three indices were higher.
The Dow Jones Industrial Average ended down 0.3% at 31,819.14. The S&P 500 closed 0.2% lower to 3,855.76. Nasdaq Composite Index gained 0.5% to 11,188.84.
Bonds
Bonds rallied as after the turmoil traders believe that the Fed will slow the pace of rate hikes. US treasury 2-year yields fell as much as 21 basis points to 4.38%. The yield on 10-year treasuries declined 10 basis points to 3.60%.
The US dollar also fell on the uncertainty over the Federal Reserve’s plans to hike interest rates.
The US regulators on Friday shut down SVB as investors withdrew billions of dollars from the bank in a matter of hours. Since the 2008 financial crisis, SVB is the largest retail lender to fall. The regulators on Sunday closed another lender Signature Bank.
Gold and silver prices surged on safe-haven buying. Spot gold rose 1% to $1,886.06 an ounce.
European stocks
European stock markets tanked on Monday as bank stocks across the continent sank. The Stoxx Europe 600 index fell over 1.5%.
France’s CAC 40 shed 2.9%. Germany’s DAX ended down 3.0%. Italy’s FTSE MIB plunged 4.0 %.
Britain’s FTSE 100 fell 2.6%.
Asian markets
Asian stocks were mixed on Monday after the US government announced its plan to protect depositors at banks.
Hong Kong’s Hang Seng rose 2.0%. The Shanghai Composite index up 1.2%. Japan’s Nikkei 225 fell 1.1%.
Brent crude fell 0.1% to $82.67 a barrel.
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