Silicon Valley Bank: US stock market rallies and regional bank shares surge – business live

The Justice Department and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, the Wall Street Journal is reporting.

The WSJ says:

The separate probes are in their preliminary phases and may not lead to charges or allegations of wrongdoing. Prosecutors and regulators often open investigations after financial institutions or public companies suffer big, unexpected losses.

The SEC and a spokesperson for the Justice Department in Washington have declined to comment.

This comes day after SVB Financial Group and two top executives were sued by shareholders, who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit susceptible to a bank run.

The proposed class action lawsuit against SVB, Chief Executive Greg Becker and Chief Financial Officer Daniel Beck was filed in the federal court in San Jose, California.

Full story: US inflation slows to 6% annual rate amid looming banking crisis

Lauren Aratani

Price rises slowed again in February as the annual rate of inflation eased but the report has been overshadowed by a banking crisis ahead of next week’s meeting of the Federal Reserve.

Prices in February were 6% higher than a year ago, down from an annual rate of 6.4% in January and significantly lower than the 9.1% peak of inflation seen in June, my colleague Lauren Aratani reports.

Between January and February, prices rose 0.4% as prices increased in sectors including housing and food.

While February saw the continuation of a downward trend in the 12-month inflation rate, the core prices – which excludes volatile food and energy prices – increased by 0.5% in February compared with a 0.4% monthly gain in January.

More here.

Ratings agency Moody’s has changed its outlook on the US banking system to “negative” from “stable” after the collapse of three major banks fueled fears of a contagion.

Moody’s Investors Service said it was making the move in light of three key bank failures in recent days that prompted regulators to step in on Sunday with a dramatic rescue plan for depositors and other institutions impacted by the crisis.

In a report, Moody’s says that the operating environment for US banks is “rapidly deteriorating”.

“We have changed to negative from stable our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY.”

As covered this morning, Moody’s also put six US regional banks on watch for a potential downgrade.

Shares in Facebooks owner, Meta, have jumped almost 6% after it announced plans to lay off another 10,000 workers.

This is the second round of significant job cuts announced by the tech giant in four months. It is also instituting a further hiring freeze as part of the company’s “Year of Efficiency”.

In a Facebook post today, CEO Mark Zuckerberg said the job cuts will take place “over the next couple of months.”

Zuckerberg wrote:

“We expect to announce restructurings and layoffs in our tech groups in late April, and then our business groups in late May,”

In a “small number of cases”, it may take through the end of the year to complete these changes, Zuckerberg says, adding:

“Overall, we expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired.”

Here’s the story:

Meta’s shares have jumped 5.5%, or $10, to $191, the highest in over a month.

German chancellor Olaf Scholz has said today that Germans should not have major concerns about the fallout of Silicon Valley Bank’s collapse.

Scholz said regulators had learned lessons from the global financial crisis in 2008, speaking in Berlin aongside Ilham Aliyev, the President of Azerbaijan.

The US stock market has jumped at the start of trading, as bank stocks mounted a comeback from Monday’s heavy losses.

The Dow Jones industrial average has gained 1%, up 314 points at 32,133 in a flurry of buying.

The broader S&P 500 index has gained 1.5%, as investors cheer the slowdown in US inflation last month.

And after a brutal day yesterday, US regional banks are bouncing back in early trading, as concerns over their financial health ease.

San Francisco-based First Republic’s shares have surged 57%, back to $49.28. On Monday it fell 62%, from $81 to $31.

Western Alliance Bancorp, of Phoenix, Arizona has gained 52%, while Los Angeles-based PacWest has jumped 55%.

Zions, of Salt Lake City, Utah, has gained 22%.

However, Ronald Temple, chief market strategist at Lazard, argues that US interest rates will actually rise higher than forecast:

“This is exactly the inflation print the Fed did not want. The elevated core inflation in February adds to the evidence of economic strength from last week’s job numbers, signalling the need for tighter monetary policy.

But asset liability management challenges for some banks might limit the latitude to tighten in the near term. Despite banking challenges, persistent inflation means markets are likely wrong to expect rate cuts this year.

The economy remains strong, and the Fed will likely need to hike rates further and keep them higher for longer than markets are currently pricing.”

Bank shares in London have turned higher too.

Barclays are up 4.6% and Lloyds Banking Group have jumped 3%, among the top risers on the FTSE 100 today.

European stock markets are now rallying, as investors are cheered by the fall in US inflation last month.

The UK’s FTSE 100 index has gained 42 points, or over 0.5%, to 7590 points, having been broadly flat before the inflation report hit the wires.

That recovers about a fifth of Monday’s selloff.

Germany’s DAX has gained 1.6%, while France’s CAC is 1.4% higher.

This suggests that the slowdown in price rises across America last month bolsters expectations of a smaller interest rate rise this month, of 25 basis points.