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Contagion effects from the U.S. regional banking crisis continues to affect the sector despite repair measures from the authorities. Following the collapse of First Republic Bank and the subsequent acquisition by JP Morgan, regional bank shares dropped heavily this week too. The latest stock decline also gave rise to speculation that there is yet another regional bank on the brink of collapse. Overall, pressure on the U.S. banking system is still at the peak as major bank indices display significant falls, ahead of the crucial FOMC meeting.
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On Tuesday, May 2, 2023, traders wondered if PacWest Bancorp is the next bank to see a crisis as the bank’s stock price dropped 28% in the day. Meanwhile, pre-market figures on Wednesday indicated a continuing trend in the U.S. banking sector.
PacWest Bancorp Is Next?
While PacWest shares were the most to drop among bank stocks, another stock of Western Alliance fell around 15% on Tuesday. This sentiment continues even after JP Morgan CEO Jamie Dimon’s comments that the starting phase of the US banking crisis was behind us. What began as a lone collapse with Silvergate Capital spread to Silicon Valley Bank and First Republic Bank.
Meanwhile, the U.S. stock market would also take into account the U.S. Federal Reserve’s rate hike decision which is scheduled for later today, when the market opens. Also, Fed Chair Jerome Powell also might make a comment on the ongoing banking crisis.
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