Despite the banking crisis, the S & P 500 is actually higher than it was the day before Silicon Valley Bank's troubles dragged the banking sector down. The index is up 0.3% from the close on March 8 through Tuesday's close. Meanwhile, the SPDR S & P Regional Banking ETF has lost about 20% in that same time frame. On Thursday, March 9, shares of Silicon Valley bank plunged by 60% after the company announced a plan to raise more cash to help offset losses on bond sales.
That caused the market to recalibrate its views on rate hikes , going from expectations of a 25 basis point hike in March and a terminal rate around 5.25% to most strongly expecting a half-point increase and an end point close to 5.75%. Now, markets are back to expecting a quarter-point increase on Wednesday, but then a couple of rate cuts before the end of the year. Pricing indicates a funds rate down to a range between 4.25% and 4.5%, according to the CME tracker.
Check again