Stocks slid on Friday to cap a hectic week of trading that ultimately saw the Nasdaq Composite (^IXIC) rise more than 4%, the S&P 500 (^GSPC) gain about 1.5%, and the Dow Jones Industrial Average (^DJI) lose 0.2%.
Perhaps not exactly the weekly returns some investors would have expected in the wake of three U.S. banks failing.
On Friday, stocks fell across the board, with financial stocks at the center of selling pressure the day after a consortium of 11 big U.S. banks banded together to deposit $30 billion into First Republic (FRC) in a bid to stabilize the banking system.
When the closing bell rang Friday, the S&P 500 was off 1.1%, the Dow down 1.2%, and the Nasdaq lower by 0.7%. The small cap Russell 2000 took the day’s biggest losses, falling more than 2.5% as the index’s weight toward regional banks — which stands at about 16% — put the index under heavier pressure than its larger peers.
The bulk of Friday’s selling pressure came in the financial sector, with shares of First Republic falling 33% after getting a lifeline from its larger industry peers on Thursday.
Regional banks continued to face the most pressure, with the SPDR S&P Regional Banking ETF (KRE) falling 6% on Friday.
Major money center banks like JPMorgan (JPM), Wells Fargo (WFC), and Bank of America (BAC) all fell more than 3% on Friday. Over the last month, shares of Wells Fargo and Bank of America have lost more than 20%; the KRE regional banking ETF has lost closer to 30% over that period.
Stocks rallied sharply on Thursday after news broke big banks led by JPMorgan and Bank of America were set to infuse First Republic with capital in what amounted to an industry bailout of the struggling bank.
The firms eventually announced their deal to backstop First Republic about a half hour before the market close. Speaking with Yahoo Finance Live on Thursday, longtime banking analyst Dick Bove said following these moves the near-term banking crisis is “over.” Friday’s market action suggested concerns from investors remain into the weekend over the longer-run prospects of these firms.