Bank stocks saw their worst day since 2020 today as SIVB stock announced news that left investors running towards the exits. SVB Financial announced today that they sold over $20B of assets for a $1.8B loss as they look to manage their balance sheet in the future. They also announced a stock offering of over $1.5B, but as investors digested this news, it was quickly realized that this may be a fear for all the other banks. This led to a selloff in risk assets and despite a rally on the SP500 in the morning, it was all wiped out as banks sold off more than 40%. All the bank stocks today lost over $40B of market value and the biggest red flag on the move was that rate hike odds dropped in response. Essentially, if this fear of contagion spreads and other banks face the same issue, the recession could come sooner than people expect or at the very least, create a liquidity crisis that would prevent Powell from raising rates.
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