CHARLOTTE — Stocks fell amid fresh worries about the banking sector, although Wall Street more than halved its losses by the closing bell.
The S&P 500 closed with a decline of 0.7%. The Dow posted a slightly steeper drop, while the Nasdaq rose slightly thanks to late gains in tech shares, The Associated Press reported. Treasury yields plunged following several reports on the economy that were weaker than expected.
This comes in response to global fears about bank failures as people have anxiety about the future of the financial sector.
There has been a lot of tension in recent months about whether the Federal Reserve raising interest rates would spark a recession, and that anxiety worsened last week with the second-biggest bank failure in U.S. history at Silicon Valley Bank. Chris Knight, owner and founder of Cornerstone Wealth Planning in Ballantyne, says he’s been fielding more calls than usual lately. Clients are asking whether their money is safe.
He’s been recommending high-net-worth clients spread cash assets between banks, to take advantage of the $250,000 guarantee from FDIC on customer deposits. For clients who are much closer to the average investor, he says diversification is always a good strategy.
“Ultimately, we think it’s still good to have a balanced portfolio with some exposure to stocks, some exposure to bonds, and maybe some cash on hand as well,” Knight said.
He added that what you should do with your money depends on your financial goals and how long you have to reach them.
“Probably for most 30-year-olds, it’s a good time to actually buy a little bit – you’ve got a lot of time on your side to let things recover and this could be a good entry point,” Knight said. “As you get older and a little closer to retirement, this could be a good time to de-risk the portfolio so you can sleep better at night.”
Markets tumbled Wednesday over fears the financial sector is not as strong as previously thought. Investment bank Credit Suisse acknowledged it found “material weakness” in its financial reporting. That sparked broad selloffs in European markets as well, as fears of a recession and the health of the banking sector went global.
Several investors Channel 9 spoke with said they’re staying calm despite the downturn.
“Don’t freak out,” said Talbot Pocock, a chef in Charlotte. “Take a deep breath. Step back. Be concerned. Be aware. Be educated, but don’t make irrational moves.”
“I feel pretty confident,” said David Willard, who works in sales. “My outlook is probably 10 years before thinking about retirement, so I don’t worry about it day to day, and hopefully I’ll be OK.”
The turmoil in the financial sector is making the Federal Reserve’s job tougher as central bankers debate whether to raise interest rates again next week in their fight against inflation.
Knight thinks this latest downturn could have an impact on their decision-making.
“There’s an old adage that the Fed will raise rates until something breaks, and as of last Friday, we finally saw something break,” Knight said. “So we may potentially see maybe a pause.”
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