JPMorgan Chase’s stock was down 1.6% at the same time, giving up some of its gains from the prior session. After JPMorgan acquired the troubled regional First Republic Bank the day before, its shares increased. Other significant banks, like Citigroup and Goldman Sachs, also experienced a more than 2% decline. 3% was lost by Bank of America.
The debt limit issue, worries about the bank sector, and most critically, trepidation about the future direction of Fed rate policy, according to our analysis, are all factors in the risk-off mood. Therefore, we’re also observing greater unease due to these other contributing factors in an area like the banking sector, which was already under stress, said Greg Bassuk, CEO of AXS Investments.
The Fed is anticipated to announce another quarter-point rate raise on Wednesday to cap off its two-day policy meeting, which began on Tuesday. According to the FedWatch tool from the CME Group, traders are factoring in an 85% chance of a rate hike. Investors will be watching for hints as to whether the Fed will hold rates constant after this meeting or tighten monetary policy even more in an effort to combat inflation.
Considering sentiment The United States Treasury announced on Tuesday that the debt ceiling may be reached earlier than anticipated. On Monday, Janet Yellen, the secretary of the Treasury, issued a warning that the United States could not have enough resources to pay its bills by late July as Goldman had predicted, but rather as early as June 1.
