Pacwest, Western… The US regional bank suffers a new stock market bleeding

Wall Street points to another day of falls with retail banking at the center of the bleeding. Pacwest has once again become the focus of tension after reporting that it is exploring strategic exit options, including a possible sale of its assets and he scores a new hit of 55.1%, pushing his titles up to $2.88. This situation also spreads to other entities in the retail segment, among which is Western Alliancewhich recorded a decrease of almost 39%, although it has gone back to 62%, after going out to deny that it is “absolutely false” that it is studying its possible sale. Zions Bancorporation (-11,8%), Comerica (-12,7%) o KeyCorp (-6.87%), for their part, also suffered major setbacks.

This blow points to the third consecutive session in the red, which is also weighed down by the news that TD Bank Group y First Horizon Corporation They have broken the pact reached in February 2022 by which the former would buy the US firm in an operation valued at 13.4 billion dollars. The Canadian bank claims that it does not have a timetable to get the permits regulations and disconnects the entity that was going to be acquired, causing it to also fall by almost 40%. TD will pay First Horizon 200 million dollars as compensation.

The turbulence is unleashed again in the market after the message made by the president of the Fed, Jerome Powellruling out an imminent rate cut after bringing interest rates money reference to a range between 5-5.25%. In his speech, the person in charge of US monetary policy admitted that a credit restriction is already taking place, the effects of which will be felt in consumption. However, he came out in defense of the financial system of that country, assuring that it remains “solid and resistant” despite the recent bankruptcies of entities such as Silicon Valley Bank o First Republic, as well as the intervention Signature Bank.

The other factor in this bank distrust on the part of investors points to the former president of the US organization and current US Secretary of the Treasury, Janet Yellen. The market asks for a signal on whether the Federal Deposit Insurance Corporation (FDIC, for its acronym in English) will extend the protection of all deposits to the segment of retail banking in general as a measure to head off the banking crisis while investors ask for more clarity on this matter. A few weeks ago, Yellen wanted to make it clear that the firewall employed with SVB Financial cannot be standardized and that neither shareholders nor bondholders are covered in the event of bankruptcy.

symptoms of cooling of this economic powerhouse They are also observed in the request for weekly unemployment benefits, whose figure has risen to 242,000, above the analyst forecasts (240,000) and well above that recorded the previous week, when they stood at 230,000, giving signs that the labor market is beginning to exhaust the good performance recorded to date. In this context, the main indices of Wall Street They also stain red with the Dow Jones in the lead (-0.97%), followed by S&P500 (-0,72%), while el Nasdaq it gave up 0.34% shortly before the half session.

From Federated Hermesthe head of European equities, James Rutherford, has warned of the risk of entering a “self-fulfilling” cycle of negative sentiment that causes stock prices to fall, the costs of financing and a flight of deposits“. If this situation occurs, it could give rise to “losses at market prices in the assets held until its maturity from the banks“, which to date have been driven by the tightening of interest rates, putting downward pressure on public debt prices.