Business

US Stocks Down After First Republic Bank Takeover

Wall Street stocks closed lower on Monday, as markets reacted to the sale of JPMorgan Chase to First Republic Bank after it was seized by financial authorities. Stocks of the regional lender plummeted after it revealed that it lost more than $100 billion in deposits over Q1. The three main US indices all finished the week in the red, despite a busy news week that includes Apple’s results and the report on the April employment statistics. The Dow Jones Industrial Average, Nasdaq Composite Index, and the S&P 500 all fell by 0.1 per cent after a turbulent session.

JPMorgan Chase has been able to gain control of the industry and calm investors’ fears about possible turmoil. Investors are now watching the US Federal Reserve closely for its next interest rate announcement, due on Wednesday. It is widely believed that the US central bank will raise its benchmark lending rates for the tenth time and possibly last time, by another quarter point. A reading from the Institute for Supply Management revealed that US manufacturing activity had contracted for the fifth consecutive month.

Investors are bracing for volatility in the coming days as the fallout of First Republic’s collapse continues. The US Federal Reserve’s interest rate decision will likely have a major effect on the financial industry and could mean the end of rate increases by the bank. Some investors are still optimistic about the future, and some predict a recovery in the next few weeks. Investors can expect a rough ride in the coming days, as uncertainty continues to hang over the market.

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