A relatively calm day in the bond market helped keep things smooth for the stock market, despite some concerns about investors’ ability to digest a $42 billion auction of 10-year Treasurys by the U.S. government.
Underneath the surface, though, were still some very sharp moves. New York Community Bancorp went from an initial gain to a steep loss of 14% and back to a gain of 6.7%. It’s the latest dizzying swing for the bank, which is still down by more than half since rattling investors across the industry last week with a surprise loss.
The bank is struggling with challenges related to its acquisition of Signature Bank, which was one of the banks that collapsed in last year’s mini-crisis for the industry. But New York Community Bancorp is also feeling pain from a problem dogging all kinds of banks worldwide: weakness in commercial real estate.
Moody’s downgraded the bank’s credit rating to “junk” status from the lowest tier of investment-grade. Analysts also said they were concerned about the recent departures of key risk and audit executives. In response, the bank said it had increased its deposits and gave details about how much cash it has on hand.
Stocks of other regional banks have been caught up in the drama, to a lesser degree, which has brought back uncomfortable memories of last year’s banking crisis. The KBW Nasdaq Regional Banking index swung between losses and gains through the day before ending 0.1% lower.
UBS analyst Brody Preston said New York Community Bancorp’s latest quarterly loss and dividend cut are due to problems related specifically to it and “are not necessarily a proverbial canary in the coal mine for other banks in the space.”
But attention is likely to remain on potential bank losses tied to commercial real estate, particularly after Treasury Secretary Janet Yellen highlighted them as a concern recently.
Elsewhere on Wall Street, Chipotle Mexican Grill rose 7.2% after reporting stronger profit and revenue for the latest quarter than analysts expected. Its restaurants sold more meals to customers than they did a year earlier.
CVS Health gained 3.1% after it likewise topped expectations for both profit and revenue in the final three months of 2023. The drugstore chain and pharmacy benefits manager, though, also trimmed its forecast for full-year results.
Ford Motor climbed 6% following its better-than-expected results, while Enphase Energy soared 16.9% despite falling just shy of forecasts. Investors are hopeful that weakness in demand for the supplier of solar and battery systems is nearing a bottom.
They helped offset a 9.7% drop for VF Corp., the company behind Vans, The North Face and other brands. It reported weaker results than analysts expected.
Snap tumbled 34.6% after its fourth-quarter revenue fell short of analysts’ expectations. The company behind Snapchat also gave a tepid forecast for 2024 after saying on Monday that it was laying off 10% of its workforce.
Wall Street was also trying to game out the impacts from an announcement that ESPN, Fox and Warner Bros. Discovery are planning to launch a streaming platform for sports. Many details are still to be worked out, as is how the deal will impact prices for broadcasting rights with sports leagues. But fuboTV, a streaming service that offers sports, fell 22.7%.
In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury edged up to 4.11% from 4.09% late Tuesday following its latest auction. Bonds have been on a jagged run recently as signals of a remarkably resilient economy force traders to push back forecasts for when the Federal Reserve may cut interest rates.
While a delay in rate cuts hurts the stock market, strong economic data also carry an upside for investors. They should mean stronger profits for companies. Such hopes have helped stocks build on their breakneck rally, which began in October, supplanting earlier hopes that a cooldown in inflation could mean imminent cuts to rates.
In stock markets abroad, indexes were modestly lower in Europe and mixed in Asia.
Stocks rose 1.4% in Shanghai but slipped 0.3% in Hong Kong following moves this week by authorities to prop up what have been some of the world’s worst-performing markets this year.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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This story has been corrected to say the U.S, government auctioned $42 billion of 10-year Treasurys Wednesday, not $42 trillion.
Credit: AP
Credit: AP
