Wall Street ends down after bank rating cuts trigger wider sell-off

Record ID: 1736908

  • Title: Wall Street ends down after bank rating cuts trigger wider sell-off
  • Date: 8th August 2023
  • Summary: NEWPORT BEACH, CALIFORNIA, UNITED STATES (AUGUST 8, 2023) (REUTERS) (SOUNDBITE) (English) PENCE CAPITAL, CHIEF INVESTMENT OFFICER, DRYDEN PENCE, SAYING: “The broader market being lower has to do with we're seeing, what we believe is, this transition in leadership. So the broader market is coming down. You had this very narrow rise in the first half of the year. That's kind of beginning to bleed off because you had P/E (price-earnings ratio) get way ahead of themselves in a lot of the leadership here. And now we see this broadening out because we still believe the economy is strong and that earnings surprises have been good so far. You have about 80% of the companies surprised on earnings, are beating on earnings to the upside. So we're in this transition moment. And I think that that's the key point here for people. You're seeing the leadership change. It's going to take a little while. We get a broader market leadership, as I would say, leadership from the laggards, that we should be coming up as we hit this transition moment over the next month or two." WHITE FLASH (SOUNDBITE) (English) PENCE CAPITAL, CHIEF INVESTMENT OFFICER, DRYDEN PENCE, SAYING: “You know, the short-term rates are much higher than the long-term rates, that's not the normal situation in which banks are going to make money. Particularly small and regional banks that get a lot of their capital from local deposits. So they're really in a situation where they're in a very struggling profit circumstance. And I think that can only go on for so long. And that's why you're beginning to see these downgrades (by Moody’s) and it's beginning to cause a little bit of concern. I'm not immediately concerned about it, but if this continues for six to nine months longer, I think that we would become much more negative on that sector(financial sector).” WHITE FLASH (SOUNDBITE) (English) PENCE CAPITAL, CHIEF INVESTMENT OFFICER, DRYDEN PENCE, SAYING: “We really don't see a recession... I mean, the bottom line is more people are working, making more money than ever before in our history. You have four million more people working today than we had pre-pandemic, at the height of pre-pandemic. And so you're looking at a lot of income that has been generated from a lot of people working. We've got real wages at almost an all-time high, and we have labor productivity at almost an all-time high. You've got 1.6 jobs for every person that's looking in this market. So every job is generating more revenue and more aggregate demand. Nobody told the American consumer, ‘Don't fight the Fed’ and the consumers have strong incomes, better incomes, and they've had in the past, there's more people working, and they're spending that money. So that provides a base to this economy. And we don't see it slipping into recession, not in 2023 and probably not in early 2024 either.”
  • Embargoed: 22nd August 2023 21:01
  • Keywords: Dow Nasdaq S&P 500
  • Location: NEW YORK, NEW YORK + NEWPORT BEACH, CALIFORNIA, UNITED STATES
  • City: NEW YORK, NEW YORK + NEWPORT BEACH, CALIFORNIA, UNITED STATES
  • Country: US
  • Topics: Economic Events,North America,Equities Markets
  • Reuters ID: LVA002319708082023RP1
  • Aspect Ratio: 16:9
  • Story Text:U.S. stocks closed lower on Tuesday (August 8) in a broad sell-off after the downgrading of several lenders by credit rating agency Moody's reignited fears about the health of U.S. banks and the economy.
    After a five-month rally pushed the benchmark S&P 500 and Nasdaq Composite within 5% of their lifetime highs, August has now recorded five losing sessions out of six.
    Tuesday's decline was triggered after the agency cut ratings on 10 small- to mid-sized lenders by one notch and placed six banking giants, including Bank of New York Mellon, U.S. Bancorp, State Street, and Truist Financial on review for potential downgrades.
    Moody's also warned that the sector's credit strength would likely be tested by funding risks and weaker profitability.
    The S&P 500 lost 19.06 points, or 0.42%, to end at 4,499.38 points, while the Nasdaq Composite lost 110.07 points, or 0.79%, to 13,884.32.
    The Dow Jones Industrial Average fell 158.64 points, or 0.45%, to 35,314.49.
    (Production: Kyoko Gasha, Alex Cohen)
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2023. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register