Remember when I said I didn't have high hopes for a volatile trading session on Thursday? We can all agree that I get that prediction completely wrong.
As happy as some traders were to see a rise in jobless claims Thursday morning, those good vibes vanished with every downtick of SVB Financial Group (SIVB) and the other regional banks that all lost between 10% and 60% on the day. Thursday's jobless claims data came in at 211,000, which was above the 195,000 most were looking for, suggesting that the labor market finally may be easing. But it was SVB's announcement that it had sold assets for a loss following a sharp decline in deposits and in response to the persistent rise in interest rates that pushed stocks lower for nearly the entire day.
The real concern surrounding the problems at SVB is that if the company benefited from years of near-zero interest rates and a consistent flow of easy money, then what are the chances this is just an isolated incident? While I am invested in JPMorgan Chase (JPM) and Citigroup (C) in a long-term, dividend-focused account, there's no question Thursday's collapse in the regional banks has me on edge.
Away from the carnage in the banks, we saw the SPDR S&P 500 ETF (SPY) close under its 200-day simple moving average (SMA), the Invesco QQQ Trust (QQQ) close on top of its year-to-date volume-weighted average price (VWAP) and 50-day SMA, and the iShares Russell 2000 ETF (IWM) slam through its recent swing low and close on top of its 200-day SMA. Simply put, none of the major index ETFs look bullish. On the flip side, we know the federal government's latest employment report here on Friday morning can reverse yesterday's selling.
The bottom line is that while I'm unwilling to gamble one way or the other on this morning's employment report, the SVB news serves as a wake-up call for anyone who believes rates can move from near-zero percent to 4.50%-4.75% in 12 months and not impact business. While I expect rumors to spread regarding other banks in a similar situation to SVB, we'll wait for this morning's jobs data and trade against Thursday's intraday lows.
