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By Staff Reporters
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(UPI) — A drain on deposits, along with the decline in asset value in a high-interest rate environment, led to a downgrade in ratings for a handful of U.S. banks, Moody’s said. Moody’s Investors Service downgraded the credit rating for smaller lenders such as Pinnacle Financial and put major banks such as Northern Trust under review.
In a report published late Monday, Moody’s said banks may be facing a liquidity and capital crisis “as the wind-down of unconventional monetary policy drains system-wide deposits and higher interest rates depress the value of fixed-rate assets.” Second quarter results for many banks, meanwhile, revealed a struggle to generate profit at a time when Moody’s expects a “mild” recession to emerge in the U.S. economy by early 2024. The investment service added that there was a particular risk coming from the commercial real estate portfolios for some of the banks under review.
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Here is where the major benchmarks ended:
- The S&P 500 Index was down 19.06 points (0.4%) at 4,499.38; the Dow Jones Industrial Average (DJIA) was down 158.64 points (0.5%) at 35,314.49; the NASDAQ Composite was down 110.07 points (0.8%) at 13,884.32.
- The 10-year Treasury note yield (TNX) was down about 5 basis points at 4.028%.
- CBOE’s Volatility Index (VIX) was up 0.27 at 16.04.
Financial and technology shares were among the weakest sectors Tuesday, with the KBW Regional Banking Index (KRX) dropping about 1.5%. Energy stocks were strong as crude oil futures climbed more than 1%.
Volatility based on the VIX spiked to its highest level since late May before receding late in the session. The U.S. Dollar Index (DXY) strengthened on expectations domestic interest rates will remain higher than those in other countries.
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Filed under: "Ask-an-Advisor", Alerts Sign-Up, Experts Invited, Investing, Op-Editorials | Tagged: A&P 500, CBOE, DJIA, DOW, DYX, KBW, KRX, Moody's bank watch, NASDAQ, Northern Trust, Pinnacle Financial, recession, regional banks, VIX | Leave a comment »
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