On Friday, the stock market experienced a rebound as regional bank shares climbed and Apple posted better-than-expected quarterly earnings. Despite this rally, the Dow and the S&P 500 logged their worst week since March, with the Dow losing 1.24% and the S&P 500 dropping 0.8%. The Nasdaq eked out a small weekly gain of 0.07%. The Dow Jones Industrial Average added 546.64 points, or 1.65%, to close at 33,674.38. The S&P 500 climbed 1.85%, ending the day at 4,136.25. The Nasdaq Composite advanced 2.25% and closed at 12,235.41.
Late Thursday, Apple reported better-than-expected fiscal second-quarter earnings, thanks to strong iPhone sales. The tech giant’s shares gained about 4.7% following the announcement.
Regional Bank Shares
The rebound for regional bank stocks was boosted by a note from JPMorgan, which upgraded Western Alliance, Zions Bancorp, and Comerica to overweight. The bank said those three institutions appear “substantially mispriced” in part due to short-selling activity. The SPDR S&P Regional Banking ETF (KRE) advanced more than 6%. PacWest, which is down sharply this week on news that it is considering strategic options that include a sale, popped 81.7%. Western Alliance also jumped 49.2%.
Despite Friday’s rebound, some experts believe the fallout in the regional banking sector is not yet over. Liz Young, head of investment strategy at SoFi, believes that the liquidity challenge faced by these banks is a universal challenge. The issue originally was deposit flight, but now the pressure is on the mark to market of the securities on all their books. Young stated, “So I don’t think that this news cycle isn’t necessarily over. … I also don’t think it dies of natural causes in the sense [that] it heats up and then just kind of cools down with no effect.”
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